Some Policies Toward Externalities Provide Incentives So That Private Decision

question 27

Essay

Some policies toward externalities provide incentives so that private decision makers will choose to solve the problem on their own. What name do we use for these types of policies?

---

Definitions:

World Price

the international market price of a good or service, influenced by worldwide demand and supply conditions.

Absolute Advantage

The ability of an entity to produce a good or offer a service more efficiently than its competitors, using fewer resources.

Production Data

Production data refers to quantitative information related to the amount, type, and efficiency of output produced by a company, industry, or economy over a specific period.

Opportunity Cost

is the value of the next best alternative forgone as a result of making a particular choice, highlighting the trade-offs in decision-making.