A Maine Legislator Wanted to Create a Deposit on Cigarettes

question 85

Multiple Choice

A Maine legislator wanted to create a deposit on cigarettes butts.If implemented,people would have the incentive to (1) not toss cigarette butts onto public streets and sidewalks,and (2) pick butts up to redeem them for the cash.The degradation of the environment from littered cigarette butts is a

• A) private goods problem.
• B) Nash equilibrium.
• C) Tragedy of the Commons.
• D) cost-benefit equilibrium.

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Definitions:

Resale Value

The estimated market value of an asset at the future date when it is likely to be sold, often used in reference to vehicles and property.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Tax Shields

The reduction in income taxes that results from taking allowable deductions such as depreciation, mortgage interest, and other allowances.

Leasing

An arrangement where one party, the lessor, grants another party, the lessee, the right to use an asset for a specific period in exchange for regular payments.