12. What are three general forms of market failure? List one specific example and
the solution.
1. Using a supply and demand diagram, demonstrate how a negative externality
such as pollution leads to market inefficiency. How might the government help to
eliminate this inefficiency? What are the environmental policy options in Developing
Countries?
2. Provide a short definition of sustainable development. How to set up a system of
national accounts that includes the value of environmental capital and its loss.
3. What is Coase Theorem? Why does private solution often fail in developing
countries?