Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Exercise 10

Explain why zoning laws, which allow certain land uses only in specific locations, might be justified in dealing with a problem of negative externalities. Explain why tax breaks to businesses that set up in areas of high unemployment might be justified in view of positive externalities. Explain why excise taxes on beer might be justified in dealing with a problem of external costs.