ECONOMICS
FISCAL POLICY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
An elderly woman in her apartment hears a song that she liked as a child.
|
|
|
A pair of endangered birds leave their nest in a nearby tree when the concert starts.
|
|
|
A pizza parlor closes early, because all of its customers are at the concert.
|
|
|
A traffic jam occurs as drivers hunt for parking spots near the concert.
|
Detailed explanation-1: -Answer and Explanation: Flowers in your neighbor’s front yard is a perfect example of a positive externality.
Detailed explanation-2: -A positive externality exists when a benefit spills over to a third-party. Government can discourage negative externalities by taxing goods and services that generate spillover costs. Government can encourage positive externalities by subsidizing goods and services that generate spillover benefits.
Detailed explanation-3: -Which of the following is an example of a positive externality? Mandatory motorcycle helmet laws are designed to reduce the severity of injuries resulting from motorcycle involvement in traffic accidents.
Detailed explanation-4: -A positive externality exists if the production and consumption of a good or service benefits a third party not directly involved in the market transaction.