Use the following to answer questions :
Figure: City with Two Polluters
-Which example illustrates a policy solution to inefficiency in the free market caused by the stated externality?
A) The city government imposes rent control.The externality is that housing's quantity demanded exceeds the quantity supplied at the current price.
B) The provincial 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 defence.The externality is that people can't be excluded from national defence,even if they don't pay for it.

Question

Use the following to answer questions :
Figure: City with Two Polluters 
-Which example illustrates a policy solution to inefficiency in the free market caused by the stated externality?
A) The city government imposes rent control.The externality is that housing's quantity demanded exceeds the quantity supplied at the current price. 
B) The provincial 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 defence.The externality is that people can't be excluded from national defence,even if they don't pay for it.

Quizplus · Accepted Answer

Offering free childhood immunizations addresses the positive externality of herd immunity, where immunized individuals help protect others from disease, thus correcting a market inefficiency.

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