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Micro 6.1-Defining Externalities-Externality #2-Fire Department
By Michael Burbine
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Last updated over 1 year ago
6 questions
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Today we will watch 4 video clips. Each video clip will help us discover one of the 4 types of externalities.
https://www.youtube.com/watch?v=WdMDxJ43WS0
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Externality #2. The Fire Department Let's the House Burn
Question 1
1.
In 1-2 sentences, briefly describe/discuss the economics decision-makers (producers and consumers) in the clip.
Question 2
2.
Was society being affected in this video?
Yes
No
Question 3
3.
The reason society was being affected, was because....(Hint: Focus on the Fire Dept)
goods and services were being underproduced.
goods and servces were being overproduced.
goods and services were being overconsumed.
goods and services were being underconsumed.
Question 4
4.
Based on your answer, is this is supply issue (production) or a demand issue (consumption)?
Supply
Demand
Question 5
5.
To fix the externality...
The producers should internalize the cost of the negative externality with a per-unit tax.
The producers should externalize the benefit of the positive externality with a per-unit subsidy.
The consumers should internalize the cost of the negative externality with a per-unit tax.
The consumers should externalize the benefit of the positive externality with a per-unit subsidy.
Question 6
6.
This video shows an example of a....
Negative externality in production
Positive externality in production
Negative externality in consumption
Positive externality in consumption