From the perspective of an externality,speed limits on highways exist
A) to raise revenue for provincial governments.
B) to increase the smooth flow of traffic.
C) because negotiating compensation with each speeding driver is impractical.
D) because insurance companies demand them.
E) to conserve gasoline consumption.

Question

Quizplus · Accepted Answer

Speed limits on highways exist as a means to address the negative externality of accidents caused by speeding drivers. It is impractical to negotiate compensation with each speeding driver who causes an accident, so a speed limit is imposed as a general rule to reduce the likelihood of accidents and their associated costs.

From the Perspective of an Externality,speed Limits on Highways Exist