The U.S.Federal government limits the ability for private firms to harvest timber on much government land.This,it is argued,increases the amount of fuel for wildfires which often burn out of control and cost money and manpower to control.
A) This suggests that the policy addressing one positive externality might have created another positive externality.
B) This suggests that those who harvest timber are prone to starting wildfires.
C) This suggests that the policy addressing timber harvesting created a negative externality.
D) This suggests that government policy is destined to fail.

Question

Quizplus · Accepted Answer

The limitation on timber harvesting creates a negative externality, as it leads to an increase in fuel for wildfires. This negative externality was likely not intentionally created by the policy, but it is an unintended consequence.

The USFederal Government Limits the Ability for Private Firms to Harvest