. Answer the following question for each of the following examples: (i) smoking by individuals; (ii) toxic waste production by firms; (iii) research and development by a high-tech firm; and (iv) individual vaccination against communicable illness. (10 marks)

a) Is there an externality? If so, describe it, including references to whether it is positive or negative, and whether it is a consumption or production externality. (4 marks)

 

 

 

 

b) If there is an externality, does it seem likely that private markets will arise that allow this externality to be internalized? In other words, do you believe any potential inefficiencies can be removed without policy changes by the government? Why or why not? (6 marks)