Course Objectives for Chapter 5: Externalities, Environmental Policy, and Public Goods
Students should be able to:
· Identify examples of positive and negative externalities and use graphs to show how externalities affect economic efficiency.
· Discuss the Coase Theorem and explain how private bargaining can lead to economic efficiency in a market with an externality.
· Analyze government policies to achieve economic efficiency in a market with an externality.
· Explain how goods can be categorized on the basis of whether they are rival or excludable.
· Define a public good and a common resource, and use graphs to illustrate the efficient quantities of public goods and common resources.