Question

Suppose that the external cost associated with chewing gum (sticky sidewalks) is 0.5 cents per packet chewed. Most economists would suggest:

Answer 1

Answer:

Doing nothing. Ignore small external costs because the cost of administering a chewing gum tax is likely large relative to the harm prevented

Explanation:

As in the given question it can be seen that the external cost that is attached with the chewing cume would not even a cent as it is only 0.5 cents. Here the value is negligible if the tax is t be charged on this than it would not generate any revenue instead of this the cost of administrative would become high

Therefore the first option is correct