Reference no: EM133592514

Question 1. Suppose a factory, XYZ Inc., produces electronic goods in a small town. While the factory provides employment to many residents, its operations result in air and water pollution, adversely affecting the health of the residents and the environment. Define the term "negative externality" in the context of the scenario provided. Suggest and explain three potential policy solutions that the government could implement to address the negative externalities caused by XYZ Inc. Discuss the possible implications on employment and the local economy if the government imposes strict regulations on XYZ Inc. to curb the pollution.

Question 2. Tax rates vary in ways that affect what items people purchase. Answer question 1 from page 191 of the textbook. Explain your answers, considering how governments use them to regulate behaviors. Think, for example, of sales v. income taxes and how governments treat them differently.

Question 3. Should health care risk be based on experience or on community rating? What are the consequences of each for equity and efficiency? What trade-offs, if any, are desirable? (question 1 from page 271 of the textbook)