Suppose that a vehicle is invented such that it emits no pollutants into the atmosphere.To achieve an efficient market outcome,the government must:

Question

Quizplus · Accepted Answer

Allowing other vehicles to emit pollutants but requiring owners to pay the costs associated with their pollution is the most efficient solution, as it allows market forces to determine the demand for zero-emission vehicles and encourages innovation by auto manufacturers. Outlawing certain types of vehicles or mandating that all auto makers produce zero-emission vehicles could lead to unintended consequences and may not necessarily achieve the most efficient outcome.

Suppose That a Vehicle Is Invented Such That It Emits