Noise pollution is a serious problem. One major contributor is the recent development of very powerful amplification equipment for automobile radios. Many people complain that the windows in their home vibrate when some cars drive by. Others complain that loud car radios set off very sensitive alarms in nearby parked cars. What do we know about the drivers of cars with loud stereos?
a. b, c, and e.
b. It would be very expensive for them to engage in this behavior if individuals had a right to a nonvibrating home.
c. The cost of their own hearing loss is less than the benefit they receive from cranking it up.
d. They realize that there are no ordinances prohibiting loud noise.
e. Their private costs fall short of the social costs.
Question 2
Which of the following are not methods of dealing with 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/reduction.
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