1) Describe why there is the insufficient recycling of the products when the externalities linked with the landfills and garbage incinerators are not regarded. What supply and demand incentives would the government offer for promoting more recycling?  Describe how there may be large amount of recycling in some of the situations.

2) describe why it is in the interest of new homebuyers and builders of new homes to have the government building codes and the building inspectors?

3) Keep an M beside the items in the following given list that describes the moral hazard problem; keep an A beside all those which describes an adverse selection problem.

a) A person having a terminal illness buys various life insurance policies through the mail.

b) A person drives carelessly since he or she has and insurance.

c) A person who plans to ‘torch’ his warehouse takes out the large fire insurance policy.

d) Professional athlete who has the guaranteed contract fails to stay within shape during the off season.

e) A woman who is anticipating having the large family takes the job along with the firm which provides the exceptional child care benefits.

4) Describe how the global-positioning antitheft device installed by the one car owner may generate the positive spill over to the thousands of others within the city.