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Cause and Individual Examples of Market Failure with a Negative Externality
In Section 1, externalities are introduced and market failures, where the socially optimal output is not the same as what the market produces by itself:
1. Describe a real-world negative externality.
2. In your externality, identify who are the participants in the market and who receives the spillover.
3. How are the incentives for the firm misaligned from the rest of society to make the externality?
4. Reply, with potential solutions, to one or more of your peers' posts.
"Fewer and fewer Americans support our government's trade policy. They see a shrinking middle class, lost jobs and exploding trade deficits. Yet supporters of free trade continue to push for more of the same - more job-killing trade agreements."
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Opponents of free trade often argue that trade with other countries destroys domestic jobs; it threatens industries that are vital to national security; it inhibits the chances of a new domestic industry from surviving; and that it is only desirab..
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Use the following supply and demand functions to answer the questions below:
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