Graph 10-4

-Refer to Graph 10-4. A policy that restricts the use of a mobile phone while driving an automobile would best be applied to a market characterised by:
A) panel (a)
B) panel (b)
C) panel (c)
D) panel (d)

Question

Graph 10-4
 
-Refer to Graph 10-4. A policy that restricts the use of a mobile phone while driving an automobile would best be applied to a market characterised by:
A) panel (a) 
B) panel (b) 
C) panel (c) 
D) panel (d)

Quizplus · Accepted Answer

Panel (a) shows a market with a negative externality, where the actions of one individual (driving while using a mobile phone) can harm others (other drivers, pedestrians, etc.). A policy that restricts the use of mobile phones while driving would help to internalize this externality, making the driver bear the full cost of their actions.

Graph 10-4 -Refer to Graph 10-4. a Policy That Restricts the Use