Question

QUESTION 10 Smoking has serious adverse consequences for both smokers and those around them. Additionally, smoke butts harm the environment. Type T for True or F for False after every statement: a. If the government is able to estimate the value of the negative externality from smoking, it would be efficient to tax it. b. A tax on cigarette smoking internalises all of the negative externalities associated with smoking. C. Consider the government introduces a tax and in addition, bans smoking in public areas. This banning of smoking in public areas indicates that simply imposing a tax on cigarettes alone does not internalise all the externalities associated with smoking.

Answer 1

The government can tax the amount of negative externalities resulted from the smoking but it become efficient only when the government is able to measure the size of the negative externality. The government cannot stop all the negative externalities, a tax on the cigarette only reduces the amount of smoking by little bit. The government cannot be able to control the harmful effects encountered by the people around the smokers. A ban on cigarettes with the the taxation will help to internalize all the negative externalities associated with the smoking,

Ans:

a. TRUE

b. FALSE.

c. TRUE.