1. What is an externality and how do negative externalities differ from the primary transaction between producers and consumers?

2. How does the widespread use of antibiotics create negative externalities that affect society beyond the individual taking the medication?

1. How does the absence of well-defined property rights contribute to market failures caused by negative externalities?

1. What are transaction costs and how do high transaction costs incentivize producers to pass negative externalities on to third parties?

1. How do consumers contribute to negative externalities when making purchasing decisions based on their own self-interest?

2. What does the graph showing marginal private benefits, marginal private costs, and marginal social costs demonstrate about overproduction in markets with negative externalities?

1. What are three examples of negative externalities and how does each impose costs on third parties?

1. What are four government policy approaches to counteracting negative externalities and how does each work?

2. How do taxes and environmental regulations attempt to allocate the costs of negative externalities to those who benefit from the economic decision?

1. What are positive externalities and how do they differ from negative externalities in terms of their effects on society?

2. How does the example of medical education illustrate both private benefits and positive externalities that justify government subsidies?

1. What is the relationship between marginal social benefit, marginal private benefit, and external benefits in markets with positive externalities?

2. How does the graph showing positive externalities demonstrate that the private market underproduces goods with external benefits?

1. What are examples of positive externalities and what third parties benefit from each?

1. What is a free rider problem and why does it occur in markets with non-excludable goods?

2. How do positive externalities and non-excludable goods create incentives for free rider behavior?

1. How do governments use taxes and laws to correct negative externalities and force producers and consumers to consider external costs?

2. What are subsidies and how do they address market failures caused by positive externalities and underconsumption?

3. How can government investments in infrastructure create both positive and negative externalities for different communities?