Question

1. Command-and-control policies and market-based policies are policies used to deal with externalities. Provide a specific example of each policy in the economy today and explain how they work.

2. “Any public good is worth producing because it benefits so many people.” Do you agree with this statement? If not, how would you decide which public good should be produced and which should not?

3. Explain why there is excess environmental pollution in our society?

Answer 1

Command-and-control policies and market-based policies are policies used to deal with externalities.Command-and-control policies directly regulate behavior. Same time, market-based policies give forces for private decission makers to change their behavior. Government uses command and control policies for the well atmosphere like pollution reduction policy. Climate change and montreal protocol are the  international environment policies examples and these policies causes to the emission of pollution. Command-and-control policies have high influence in the protection of clean environment.

Clean Air Act is another economic policy that was enacted for the protection of air pollution.

Clean Water Act was enacted to address the air pollution.

There are another types of economic policies which deal with the system of taxation, government budget, interest rate, labour market, national ownership, money supply and etc. These policy can be divided into fiscal policy and monetary policy. The important goal and aim of these policies is the eradiction of inflation and unemployment and to make economic growth.