Sometimes market activities (production, buying, and selling) have unintended positive or negative effects outside the market's scope. These are called externalities. As a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant, answer the following questions:
- What two policies could you use to reduce the total amount of emissions?
- Why do you think they each would work?
- What would the benefits of each action be (besides emissions reduction)?
- What would the costs of each action be?
- How would you decide what was the best level of emission reduction?