Positive incentives:
a. increase benefits or reduce costs

An example of an activity that generates an external cost is

A) dumping soapsuds into a trout stream. B) national defense services. C) planting flowers along an interstate highway. D) eating an apple.

The deadweight loss of a tariff

A) is a social loss because it promotes inefficient use of national resources. B) is a social loss because it reduces the revenue of the government. C) is not a social loss because it merely redistributes revenue from one sector to another. D) is not a social loss because it is paid for by rich corporations. E) is not a social loss because it aids domestic consumers.