Wednesday, August 05, 2009

Unit 1: Negative externalities resulting from the Norwegian oil spill

The BBC has a video of the effect of an oil spill on the Norwegian coast

http://news.bbc.co.uk/1/hi/world/europe/8182789.stm

a) Define negative externality/external cost
b) Using evidence for the video, explain the negative externalities that may arise from this oil spill
c) What additional private costs will arise for the shipping firm from this oil spill?
d) Are there any private or external benefits/positive externalities that may arise from this oil spill?

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