1. What is the importance of multinational corporations today? What are the reasons for their existence? Explain.

Multinational corporations tend to make the business community smaller in todays society. One corporation is able to have companies in many nations. Within each nation the corporation is able to accommodate the needs of the communities. For example, the corporation is able to tailor their product to the community and supply jobs. In addition, multinational corporations can realize economics of scale by employing cheap labor is some nations. Multinational corporations exist to serve its constituents and shareholders. 2. Your parents own 1,000 acres of land. The land is the flight path to an airport, and planes regularly fly over it as they make their approach to the airport. Why cant your parents charge the airlines for using their air space? Explain. The parents may own the land but dont own the air, an open access resource. Because air is a renewable resource, it can not be owned by private owners. As owners of the land, the parents have the right to use their resource as efficiently as possible. Their private property rights allow them also charge for the use of their land; however, trying to specify and enforce open access resources is extremely difficult and costly. 3. Why would a ban on all pollution cause deaths just as unrestricted pollution cause deaths? Unrestricted pollution is a negative externality. Excess pollution can cause deaths by polluting the water we drink, the air we breathe and the land we farm on, thus polluting our food chain. Unrestricted pollution needs to be controlled and regulated by government as well as by the producers of the pollution. Restricted pollution could cause production to decrease or halt altogether. By severely restricting pollution, factories would not be able to produce any goods because of the byproduct of the good would cause pollution. 4.