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Paper Instructions:

Externalities Assignment

The purpose of this assignment is to assess your understanding of economic externalities, public goods and how they are paid for. Write a 1 to 1.5 page (500-750 words) essay. In your paper, discuss the definition of externality, why government intervention is usually required to address the economic failure that results, and how taxes are used to fund this.

Use your textbook and at least one other reliable source to find information. The online library or Google Scholar are both good options.

Structure your paper as follows:
1. Intro paragraph (5 points) – provide overview of the information you will cover, including describing how externalities, market failures, and taxes are related.

2. Body paragraphs (15 points) – detailed description of each of the following as they relate to your thesis.
a. Taxes
i. Clearly define and give an example of each type of tax approaches: proportional, regressive, progressive. The examples do not need to be actual taxes, just taxes that you realistically create to give examples of the three types of taxation.
b. Externalities
i. Define the concept of economic externality.
ii. Give an example of a positive and a negative economic externality.
iii. Why is government intervention generally required to adjust for economic externalities?
c. Public Goods
i. Give an example of a public good and explain why it is a public good (think about the excludability and rivalry of the good).
ii. Why do public goods need to be paid for via taxes?
iii. Explain the Free Rider problem, and how it is addressed via taxes.

3. Summary (3 points)
a. Restate your thesis and provide a conclusion about your main points.

4. References page (3 points)
a. Provide a list of references; must include author, title, publication title, publication year, and source or retrieval information.

Content requirements: (3 points)
• Content should be in your own words, with 20% or less from outside sources
• In-text citations used for any information from outside sources, should include author and publication year
• Quotation marks enclose any information used word-for-word.  
Writing mechanics: (6 points)
• Times 12 point font, double-spaced text, indent first line of each paragraph
• Proofread and correct all errors in capitalization, punctuation, grammar, and spelling