may, whether economies have markets that are

laissez faire, loosely or tightly regulated, or whether the government is the major

decision maker, markets do fail. That is, they fail to register the

appropriate/proper/efficient prices and quantities in the marketplace. Costs and/or

benefits may, in some markets, spill over onto people outside of the market transactions

- thus, the externality. Some are positive (my neighbor who lives to the left of me, has a

flower garden that improves my quality of life and he's done all the work) and some are

negative (my neighbor to the right of me lowers the quality of my life with the two broken

down cars he keeps on his front lawn). Noting what has been mentioned above, take a

positive externality or a negative externality and explore it in detail. Examine the role of

social costs and benefits, private costs and benefits, what role, if any, can the

government or even the private sector play in correcting the externality, is there a free

rider problem associated with it and can it be corrected? As we attempt to correct for the

externality what additional tradeoffs may the private and/or pubic sectors make? You

should use graphs to help reinforce and bolster your argument.