Question

18. Fire extinguishers exhibit positive externalities because, even though people buy them for their own use, they may prevent fire from damaging the property of others. The problem with providing fire extinguishers on the free market is a. Too few will be provided because the price is too low b. Too many will be provided because the price is too low c. Too few will be provided because the price is too high d. Too many will be provided because the price is too high 19. Which of the following is not a potential solution to achieve the optimal amount of a good that has a negative externality a. Restrictions on the amount of the good that can be produced b. Taxing producers of the good c. Taxing consumers of the good d. Subsidizing consumers of the good e Market based solutions (e.g. tradable permits) cenario 3 Consider two companies (both located in Sulphurdale, UT) which produce cool products which require the use of Sulfur. As a result of the production process, sulfur dioxide (S02) is emitted into

Answer 1

18. (c) Too few will be provided because the price is too high.

Usually people's have limited lbs of fire extinguisher at thier residence for case of emergency.It cost approximately $95 per 17lbs and its doesn't not last more than 5-10 years.There is heavy duty of rechargeable- fire extinguishers , in free market. So the cost is one problem.

19. (d) Subsidizing consumers of goods.

Negative externalities means cost that is incurred by thrid party ie. Other than consumer and producer.

Subsidizing consumers of goods doesn't restrict production and consumption of such goods which promotes negative externalities.