Which of the following are not methods of dealing with externalities?
A) Relying on voluntary compliance.
B) Taxing the output of industries that pollute.
C) Creating legal environmental standards.
D) Increasing public spending on cleanup/reduction.

Question

Quizplus · Accepted Answer

Relying on voluntary compliance is not a method of dealing with externalities as it involves leaving it up to individual firms and individuals to choose to act in an environmentally responsible way. This approach is often ineffective as firms may prioritize profit over environmental concerns. The other three options (taxing polluting industries, creating legal standards, and increasing public spending on cleanup/reduction) are all methods of dealing with externalities.

Which of the Following Are Not Methods of Dealing with Externalities