In two-car automobile accidents, passengers in the larger vehicle are significantly more likely to survive than are passengers in the smaller vehicle. In fact, death probabilities are decreasing in the size of the vehicle you are driving, and death probabilities are increasing in the size of the vehicle you collide with. Some politicians and lobbyists have argued that this provides a rationale for encouraging the sale of larger vehicles and discouraging legislation that would induce automobile manufacturers to make smaller cars. Critically examine this argument using the concept of externalities.
Answer to relevant QuestionsWhy do governments sometimes impose quantity regulations that limit the level of negative-externality-inducing consumption? Why do governments sometimes impose price regulations by taxing this consumption? The marginal damage averted from pollution cleanup is MD = 200 – 5Q. The marginal cost associated with pollution cleanup is MC = 10 + Q. a. What is the optimal level of pollution reduction? b. Show that this level of ...Many towns and cities on the northeast and west coasts have passed bans on smoking in restaurants and bars in the past decade. What is the economic rationale behind these bans? Would there be similar rationales for banning ...Imagine that it is 1970, and your parents are in college, debating the merits of the CAA of 1970. Your father supports the act, but your mother says that since it only covers new plants, it might actually make the air ...Think about the rival and excludable properties of public goods. To what degree is radio broadcasting a public good? To what degree is a highway a public good?
Post your question