A gasoline tax to finance highways is a fairly good example of democratic decision-making resulting in the efficient level of output.

Question

Quizplus · Accepted Answer

A gasoline tax is considered a form of Pigouvian taxation, which aims to internalize the negative externalities (e.g. pollution, congestion) associated with using gasoline and driving on highways. By increasing the cost of gasoline, people are incentivized to reduce their consumption, use public transportation or carpool instead, which ultimately leads to a reduction in traffic congestion, air pollution, and other external costs. Therefore, a gasoline tax can result in the efficient level of output and is a good example of democratic decision-making, since it reflects the preferences and needs of the majority of citizens who rely on the transportation system.

A Gasoline Tax to Finance Highways Is a Fairly Good