1. 7. Mat ea concept in Column A with an example in Column B.

Column A Column B

a. A negative externality

b. A Pigovian tax 1. A policy to increase production when a good generates a positive externality 2. Represented by the difference between the private marginal benefits and the social marginal benefits

c. A positive externality 3. A tax on raw materials

d. A subsidy

e. An upstream tax 4. Converting future costs and benefits to present value 5. Represented by the difference between the private marginal costs and the social marginal costs

f. An ecosystem service benefit 6. Using the costs of building a water treatment plant to estimate the value of natural water purification g. A nonuse benefit 7. Using surveys to elicit information about willingness to pay h. Replacement cost method 8. Internalizes a negative externality i. Revealed preference method 9. Flood protection from a wetland j. Contingent valuation 10. Estimating the recreation benefits of a lake using data on visitation paerns Column A k. Discounting Column B 11. e value of just knowing a national park exists