All of the following are sources of negative externalities except one. Which is the exception?
a. a paper mill that pollutes a river
b. a person who throws a beer can out the window of a moving car
c. cars, which emit carbon monoxide
d. a solar water heater which is outside and obscure from view
e. products that contribute to the greenhouse effect
D
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Which of the following hypotheses is a plausible explanation for why U.S. households save so little?
A. Government assistance to low-income U.S. households has increased the demonstration effects on spending by the poor. B. Most American already own homes and, therefore, have less need for life-cycle saving. C. The highly developed financial markets in the U.S. have reduced the need for precautionary saving by Americans. D. Government assistance to the elderly has reduced the need for life-cycling saving.
The following was heard on a primetime news cast. "The government has just increased the sales tax. This is unfair to consumers, particularly the poor, because budgets are already stretched far enough. It would have been much more fair for the government to have levied an excise tax on firms as a way of making big business give back to the community." Explain why the person's argument is more than likely incorrect. Be sure to discuss whether the person has over or understated the effect of the tax on consumers and producers.
What will be an ideal response?
Some advocates of antipoverty programs claim that fighting poverty is a public good. Describe why government intervention may be necessary to reduce poverty
If a Balanced Budget Amendment to the U.S. Constitution were passed, during an economic slowdown, such an amendment would
A. necessitate a tax increase or spending cut, or both. B. have no impact. C. necessitate an increase in interest rates. D. necessitate a tax cut or spending increase, or both.