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.