8/10/2019 environ.docx

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8/10/2019 environ.docx

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As demonstrated by the graph, price increase, therefore lowering supply and demand. Taxes internalise

negative externalities into the price of goods and services increases their price, making such

goods uncompetitive

Negative externality graph

Negative externalities there is an unintended negative social cost as private cost does not considerthis

in its mechanism. Hence taxes internalise this E.g. petrol is taxed at 38% per litre in order to promote the

use of alternative method of fuel, ones that are more sustainable and environmentally sound. Such as

electricity and bio-fuel.Moreover, providing effective as many petrol stations are shriving to

provide bio-fuel and electric cars are on the rise with companies such as Tesla motors.

Alternatively, microeconomic policies aims to alter the supply-side of economics, whereby,

adjusting the structure and resource allocation within the economy.

The government can ban the production of environmentally dangerous and their use in society.

For example,in 2002, it was made illegal to sell leaded petrol as it had negative implications on the

human body. Moreover, promoting environmentally sound as an alternative. Moreover, many

environmentally sound practices are not conducted as it is not monetarily viable for the business.

Therefore, government often have to provide the good or service themselves. For examples, the

2008,$12 billion irrigation system in rural areas to improve the flow of water and reduce draught that mayaffect crops. Whereby, private means were not viable. Moreover, creative positive externalities as farms

and residents were able to save money through the new system.

Nonetheless, issues lie in the enforcement and implementation of such notions. As various

constraints are inherent.

Conflict between economic growth and environmental sustainability. Moreover, the notion of

intergenerational equality.

Political constraints (Gillards policy fucked up)

Time lags.