A free good is one that can be acquired without sacrifice.

If taxes go up and all else remains equal, then consumption should:

a. rise by more than the tax increase. b. rise by the same amount as the tax increase. c. rise by less than the tax increase. d. fall.

Which of the following is not an effective method of reducing negative 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 and reduction of pollution