Post your response to the following:

In addressing the externality, why is the good or service over underproduced or overproduced?

How does the application of Tax or Subsidy, Regulation, or Coase correct this problem?

Construct a solution and comment on one of the following:

Barking Dog- You live in a rural area where there are no laws to protect the right to peace and quit.Your neighbor who lives a short distance away, get a dog that barks non-stop.The neighbor loves the dog to a value of $500.The Barking imposes a cost of $800 upon you for loss of sleep.

The Mansion Next Door- As aHollywood star you have purchased a home in a suburban community near the ocean and would liketo "re-build" the home into a 5 story mansion.The people around you will lose their view of the ocean, but you will have a fantastic home.Local zoning ordinances protect the property rights of your neighbors land and view.How will you get your home built?

The Purple Passion- Your next door neighbor is unloading gallons and gallons of Bright Purple paint in their driveway and has announced that his "Entire home will be a Purple Palace."You call the City Planning Commissions and find that there are CC&R(Covenants, Conditions and Restrictions) which limit (to a very limited pallette of colors NOT including Purple)paint colors that can be used to paint a home .Explain the regulation to your neighbor on why they CANNOT paint their home Purple.