Recall the Application About the External Cost of Young Drivers

question 98

Multiple Choice

Recall the Application about the external cost of young drivers to answer the following question(s) .
-Recall the Application.The goal of taxing drivers for each mile they drive is to

• A) keep insurance rates high.
• B) generate tax revenue to repair roads.
• C) internalize the external costs from collisions.
• D) get elderly drivers off the highways.

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Definitions:

Social Goods

Goods that benefit all members of society and are often provided by the government, such as public parks and national defense.

Collective Benefits

Advantages or positive outcomes that are shared by a group, community, or society from actions or policies, rather than by an individual alone.

Market Failure

Occurs when the allocation of goods and services by a free market is not efficient, often due to reasons like externalities, lack of public goods, or monopolies.

Misallocated Resources

Occurs when resources (like labor, capital, or materials) are not used in the most effective manner, often leading to inefficiencies or lost potential in production or service delivery.