Which of the following is an example of a government solution to externalities?
A)The city government imposes rent control.The externality is that the quantity demanded for housing exceeds quantity supplied at the current price.
B)The federal government imposes a minimum wage.The externality is that firms pay too little to their workers.
C)The government offers free childhood immunizations.The externality is that an immunized child cannot transmit disease to others.
D)The federal government provides national defense.The externality is that people can't be excluded from national defense even if they don't pay for it.

Question

Quizplus · Accepted Answer

Offering free childhood immunizations is an example of a government solution to externalities, specifically positive externalities. By getting immunized, a child is not only protected from disease, but also cannot transmit the disease to others, benefiting society as a whole. The other options do not address externalities, or they address negative externalities with questionable effectiveness (rent control, minimum wage). National defense is a public good, not an externality.

Which of the Following Is an Example of a Government