Economist A

question 181

Essay

Economist A.C.Pigou argued that to deal with a negative externality in production, the government should impose a tax equal to the cost of the externality.What did Pigou believe should be done in the case of a positive externality in consumption? How would his recommendation impact the demand and market equilibrium for the product which is generating the positive externality?

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Definitions:

Symbolic Interaction

A theoretical perspective in sociology and social psychology that focuses on how individuals interact with one another based on the meanings they assign to symbols.

Symbols

Objects, characters, figures, or colors used to represent abstract ideas or concepts.

Erving Goffman's Dramaturgy

Goffman's theory that life is like a never-ending play in which people are actors, each playing a variety of roles, with the goal of managing the impression they make on others.

Discredited Stigmas

Social marks of disgrace that have been challenged, reconsidered, or proven to be unjust.