Your consulting firm has been hired by the State of California to help them decide on funding for the Univer- sity of California. Your analysis is based on the following premise: higher education has important spillover benefits for the state. When the workforce is more educated, then it is more likely that collaborations between workers with higher education will collaborate together and lead to new business and technology innovations. Education, therefore, leads to more new businesses, higher paying jobs, and increased economic growth for the state. Background. Before addressing the issue of higher education spending, you need to first explain the concept of an ezternality. You will explain an externality using the example of a surfboard factory located near the Pacific Ocean that dumps its pollution in the ocean, where ocean currents then take it downstream and harm fisheries. a. Explain how pollution is an externality. b. Using a graph, show that there is an over-production of surfboards; that is, without government intervention the private market will produce more surfboards than the socially efficient quantity

David burdick is the ceo of acme bubblegum, a successful public company. as one of the cofounders of the company, burdick has enjoyed speaking and writing about the success of acme bubblegum for several years. typically, he speaks at conferences or directly to the press, but recently, he has been blogging about his firm anonymously. specifically, he defended a recent advertising campaign that was unpopular among consumers and pointedly attacked one of acme bubblegum’s competitors. burdick deeply enjoys his anonymous blogging and believes that none of his readers actually know that he works for acme bubblegum. should burdick be allowed to praise his company’s performance anonymously online? should he be allowed to attack his competitors without disclosing his relationship with the company? how would you feel if the ceo of a company at which you shopped was secretly writing criticisms of his or her competition? how would you feel if you knew a writer for your favorite blog was actually closely involved in a company that the blog discussed? 1. define the ethical issue? 2. who are the primary stakeholders? 3. what are the possible alternatives? 4. how could you evaluate the ethical implications of the alternative actions (use appropriate decision rules)? 5. what action would you recommend and why?