📚 Learning Guide
Negative Externalities in Consumption
hard

How can government intervention effectively address the negative externality caused by homeowners planting trees?

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

By subsidizing tree planting to encourage more trees

B

By imposing a tax on tree planting to internalize the cleanup costs

C

By offering free cleanup services to neighbors affected by fallen leaves

D

By banning tree planting altogether in residential areas

Understanding the Answer

Let's break down why this is correct

Answer

When homeowners plant trees, they create a positive externality by improving air quality and providing shade, but this can also lead to negative externalities like reduced sunlight for neighbors or increased maintenance costs. Government intervention can help manage these issues by creating guidelines or regulations that encourage responsible tree planting. For example, the government could set rules about how tall trees can grow and where they can be planted to minimize their impact on neighbors. They could also provide incentives, such as tax breaks, for homeowners who plant trees in a way that benefits the community without harming others. This way, the government helps balance the benefits of tree planting with the potential drawbacks for the surrounding area.

Detailed Explanation

A tax on tree planting makes homeowners think about the costs of fallen leaves. Other options are incorrect because Giving money to plant more trees might seem good, but it can make the problem worse; Offering free cleanup might help in the short term, but it doesn't solve the problem.

Key Concepts

Negative Externalities
Government Intervention
Market Failures
Topic

Negative Externalities in Consumption

Difficulty

hard level question

Cognitive Level

understand

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