Review
4. In each case, identify any divergence between social and private
costs or social and private benefits.
a. Cigarette smoking
b. Weather forecasting
c. Private ownership of guns
d. Drilling for offshore oil
e. Public health research
5. For each of the situations in the table below, indicate whether
there is a positive or a negative externality. Indicate in each case
whether social marginal cost is greater than or less than
private marginal cost or whether social marginal benefit
is greater than or less than private marginal benefit
.Positive or
negative
externality?You smoke
a cigarette
and blow
the smoke(MCS)
(MCP)
(MBS)
(MBP)MCS <> MCP MBS <> M