Additional Application
For the first seven months of 2006 Stockholm,Sweden has been testing a possible solution to the city's traffic congestion.It is called "congestion pricing" and their system includes "small transponder boxes,laser detectors and a network of cameras to track the path of every car…" They want to reduce problems associated with smog and gridlock and,in turn,improve the quality of life.
The experiment recorded each car's registration,the date and time of day,as it passed through specific electronic tolls and calculated a fee that was charged to the car's owner.During the rush hour the fee could be as high as $2.75.But in the evenings the toll would be zero.The expectation is that people will respond to these varying tolls,change their driving habits to be more efficient,and take more public transportation.
The next step is to put a referendum to the voters to decide whether this system will become a permanent feature in the life of Stockholm drivers.
Leila Abboud and Jenny Clevstrom,"Stockholm's Syndrome: Hostages to Traffic,Swedes Will Vote on High-Tech Plan To Untangle Snarls With Tolls," Wall Street Journal,August 29,2006,http://infoweb.newsbank.com,accessed 11/22/06.
-By imposing tolls on the drivers that drive during the busiest times,the government is attempting to:
A)internalize an externality.
B)institute a progressive tax.
C)externalize an internality.
D)make Stockholm a famous pedestrian city.

Question

Quizplus · Accepted Answer

By imposing tolls on drivers who contribute to congestion and air pollution during rush hour, the government is attempting to internalize the externality of their negative impact on society. This is done by making drivers bear the cost of their actions, which in turn incentivizes them to find alternative modes of transportation or adjust their driving schedule to avoid peak hours.

Additional Application For the First Seven Months of 2006 Stockholm,Sweden Has Been