1.2. In each of the following cases, determine whether an external cost or an external benefit is imposed and what an appropriate policy response would be.

a. Trees planted in urban areas improve air quality and lower summer temperatures.

b. Water-saving toilets reduce the need to pump water from rivers and aquifers. The cost of a gallon of water to homeowners is virtually zero.

c. Old computer monitors contain toxic materials that pollute the environment when improperly disposed of.