The External Costs of Alcohol Consumption Are Related To, Among

question 200

Multiple Choice

The external costs of alcohol consumption are related to, among other things, death and injury related to auto accidents caused by drunk drivers.These costs have been estimated to be about 47 cents per ounce of alcohol consumed.Taxes on alcohol amount to 23 cents per ounce.This suggests that alcohol consumption is (i) greater than the efficient or optimal amount; (ii) should be reduced to zero to eliminate the externality.

• A)i and ii
• B)i not ii
• C)ii not i
• D)neither i nor ii

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Definitions:

Great Depression

A severe global economic downturn that took place during the 1930s, leading to widespread unemployment, poverty, and deflation.

Economic Policies

are strategies employed by governments or monetary authorities to influence the economic behavior of a country, including fiscal and monetary policies.

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A U.S. government program created in 2008 to purchase toxic assets and inject capital into banks to stabilize the financial system.

Federal Budget Deficit

A flow variable measuring the amount by which federal government outlays exceed federal government revenues in a particular period, usually a year.