The Downside to Targeting Specific Activities Rather Than the Externality

question 32

Multiple Choice

The downside to targeting specific activities rather than the externality itself is:

• A) it risks misaligning the incentives that producers and consumers face with the goal of minimizing the externality.
• B) it requires a number of different activities to be identified and several different policies to be written, which can be cumbersome and difficult to manage.
• C) any one activity is likely to not make a significant difference in the presence of an externality.
• D) All of these statements are true.

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Definitions:

Multiculturalism

An ideology or policy that promotes the presence, acceptance, and interaction of diverse cultures within a society, emphasizing mutual respect and equality.

Espionage Act

A United States federal law passed in 1917 that made it a crime to interfere with military operations, support enemy countries, or promote insubordination in the military.

Sedition Act

A law enacted by the U.S. government in 1918 and earlier versions, making it a crime to write, publish, or speak against the government or war effort.

Free Speech

The right to express one's opinions without censorship, restraint, or legal penalty, protected under the First Amendment of the U.S. Constitution.