Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 10 - Part IV - Externalities - Problems and Applications - Page 213: 1

Answer

The steering wheel lock would make it harder for car thieves to break into a car, but then, the thieves would possibly get into car accidents with other people (which is negative). Thus, the steering wheel lock is a negative externality.

Work Step by Step

The tracking system doesn't defer car thieves from breaking into a car, but other car owners would not be affected by the theft. Thus, the tracking system is a positive externality. There could possibly be policy implications since policies could be made to think about the externalities of the different way to protect a car from theft.
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