One reason for market failure is when externalities are pres…

One reason for market failure is when externalities are present. (1)__________ (True or False) Sometimes, the production and consumption of goods create side effects, or spillovers, that impact people who are not directly involved in the market transactions. These side effects are known as externalities (2) ___________ (True or False).

The textbook presents three specific types of environmental…

The textbook presents three specific types of environmental policies for air pollution as follows: Method 1: Government regulation, or command and control.  Method 2: Emission taxes.  Method 3: Tradeable pollution permits (cap and trade).  In general, economists do not favor _____________________ since they reduce the incentive to discover lower cost methods of reducing pollution and ignore the fact that it might be less costly for some firms to reduce pollution compared to others.