Which of the following is the government most likely to discourage because of the existence of externalities?

Question

Quizplus · Accepted Answer

The government is likely to discourage activities or goods that create negative externalities, such as pollution from cars that create excessive exhaust fumes. Negative externalities impose costs on society that are not reflected in the price of the product, and thus the government may take measures to discourage or regulate such activities.

Which of the Following Is the Government Most Likely to Discourage