Additional Highway Traffic

question 21

Multiple Choice

Additional highway traffic

• A)creates a positive externality
• B)creates a negative externality when a highway is congested
• C)creates a negative externality even if a highway is not congested
• D)is Pareto optimal
• E)requires a side payment

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Definitions:

Tax Burden

The total amount of tax that individuals or businesses must pay, relative to their income or profit.

Progressiveness

A political or social philosophy advocating or implementing social reform or new, liberal ideas.

Tax Revenue

The income that is gained by governments through taxation, forming a significant part of their funding for public expenditures.

Elastic Demand

A situation where the quantity demanded of a good or service changes significantly in response to price changes.