In 1920 a constitutional amendment was passed that outlawed the production, sale, purchase, and consumption of alcoholic beverages. Prohibition encouraged bootlegging and black markets for whiskey, wine, and beer.
The amendment was eventually repealed in 1933. In 1920, what alternative economic policy was available to the government as a means of reducing alcohol consumption nationwide?
Question 2
The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. If paper production is 4 tons per week, the outcome is ________.
A) efficient because marginal benefit equals marginal private cost
B) efficient because private and external costs are accounted for
C) inefficient because only marginal external benefits are accounted for
D) inefficient because marginal social cost exceeds marginal social benefit