1. Do you agree with the following statement? “Efficiency cannot be achieved when externalities exist.” Explain your view.

2. What kinds of information must be gathered to internalize an externality?

3. Why do limits on pollution emissions fail to internalize the externality that generates the pollution?

4. Under what conditions are externalities likely to be internalized without the necessity of government intervention?

5. When does majority rule lead to the possibility of public choices that result in the outcome of an election being contingent on the order in which alternatives are presented to the electorate? Under what conditions will a unique collective choice result from simple majority rule?