Which of the following is an example of a government solution to externalities?

Question

Which of the following is an example of a government solution to externalities?
Choose one answer.
a. The government offers free childhood immunizations. The externality is that an immunized child cannot transmit disease to others.
b. The federal government imposes a minimum wage. The externality is that firms pay too little to their workers.
c. The city government imposes rent control. The externality is that the quantity demand for housing exceeds quantity supply at the current price.
d. The federal government provides national defense. The externality is that people can't be excluded from national defense even if they don't pay for it.

Explanation / Answer

a. The government offers free childhood immunizations. The externality is that an immunized child cannot transmit disease to others. A diseased child will transmit the disease to others this is a negative externality, to internalize this government provided free immunization vaccine, which prevents or internalizses this negative externality.

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