Noting what has been mentioned above, take a positive externality or a negative externality and explore it in detail. Examine the role of social costs and benefits, private costs and benefits, what role, if any, can the government or even the private

Short paper # 2 must include graphs, a works cited page, have proper APA format throughout
the paper, and must be the equivalent of 4 pages of APA properly formatted writing.
Try as we may, whether economies have markets that are laissez faire, loosely or tightly regulated, or
whether the government is the major decision maker, markets do fail. That is, they fail to register the
appropriate/proper/efficient prices and quantities in the marketplace. Costs and/or benefits may, in
some markets, spill over onto people outside of the market transactions – thus, the externality. Some
are positive (my neighbor who lives to the left of me, has a flower garden that improves my quality of
life and he’s done all the work) and some are negative (my neighbor to the right of me lowers the
quality of my life with the two broken down cars he keeps on his front lawn). Noting what has been
mentioned above, take a positive externality or a negative externality and explore it in detail. Examine
the role of social costs and benefits, private costs and benefits, what role, if any, can the government or
even the private sector play in correcting the externality, is there a free rider problem associated with it
and can it be corrected? As we attempt to correct for the externality what additional tradeoffs may the
private and/or pubic sectors make? You should use graphs to help reinforce and bolster your argument.

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