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Government Response to an Externality (10 points, 5 points each) A. List ways the government can respond to an externality. Which are economically best? B.

Government Response to an Externality (10 points, 5 points each)

A. List ways the government can respond to an externality. Which are economically best?

B. Give an example of two goods not discussed in the textone with a positive externality and one with a negative externality. Explain clearly which aspects of the benefit of the good are private and which are public.

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