Asked by John

In each of the following situations, explain how government intervention could improve society’s welfare by changing people’s incentives. In what sense is the market going wrong? (2-part answers)

a. Pollution from auto emissions has reached unhealthy levels.
Answered by Ms. Sue
Increase taxes on cars that produce more than the minimum for auto emissions.

Answered by Darlene
The government could intervene by offering a financial incentive in the form of a tax rebate to those individuals who purchase a new, highly efficient automobile.