1. Climate change and externalities.
   1. How is the issue of climate change related to the concept of externalities? What is the externality? What are the relevant markets?
   2. Provide an example of a market that features this externality. Assuming there is no intervention to correct for the externality, compare the market allocation to the efficient allocation. Does the market produce too much? Too little? Is the market outcome efficient?
   3. What is the relationship between the marginal private cost of production in this market and the marginal social cost? Explain.
   4. Suppose you wanted to come up with an estimate of the magnitude of the marginal external cost (in dollars). What would this number represent? What sort of information would you need to determine this number?