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MMLU / Which of the following is the best example of a negative externality and the…

Problem

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question

Which of the following is the best example of a negative externality and the appropriate plan for eliminating it?

choices

  1. Air pollution from a factory blows downwind and harms children in a small community. Tax the citizens of the community.
  2. Your neighbor plants a fragrant blooming cherry tree in her front yard. Give a tree subsidy to your neighbor.
  3. The waste from a hog farm pollutes a neighbor's drinking water. Give a subsidy to the hog farmer.
  4. Air pollution from a power plant is blowing downwind and harming the trees in your community. Tax the production of electricity.

subject

high_school_microeconomics

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