Extra Credit Assignment 2:

Extra Credit Assignment 2:

1. The Lorax is an example of the market activity causing negative externalities because it involves the environmental problems that affect third parties but not in ways such as an increase in prices. The film highlights the pollution of the environment by the industry of the Once-ler family, and the risk it poses to animals living in Truffula Forest.
2. The societal harm caused by Once-ler’s actions includes the destruction of the forest since the family cuts down Truffula trees to be used in their new Thneeds company. The cutting down of trees leads to displacement of animals like Brown Bar-ba-loots who starves since to lack of food because they fed on fruits from Truffula. The invention of Super-Axe-Hacker causes air pollution by releasing fumes and smoke.
3. The only benefit realized by Once-ler’s actions is that residents get clothes and source of employment from the company.
4. Imposing high taxes on the company would have discouraged it from relocating in Truffula forest.

b.Introducing regulation that bans the use of trees in manufacturing products would have barred Once-ler family from cutting down trees for industrial use.

1. Use of coasian bargaining would have led to an agreement that favours both parties. Lorax and Once-ler family. For instance, they could agree that only a certain number of trees can be cut in a day, and the company should replace them with others.
2. Material substitution, where the company is forced to use other law materials, apart from trees, would help in preventing deforestation.
3. The activity that I have done is the use of a diesel generator as the source of power in our home. The third people affected were my neighbours who suffered from noise and air pollution caused by the machine. To avoid causing the problem, I would have used solar panel energy or electricity.
4. I was once harmed by dirt and sewage dumped in the river by a company in my locality. The dirt and sewage led to a cholera outbreak. I mobilized people in the society, and we held a demonstration against the pollutions, and later sued the company. The company was fined, and its license suspended; thus, our environment is now safe.