In 1998, the National Highway Traffic Safety Administration distributed the film Without Helmet Laws, We All Pay the Price. Two reasons for this title are that some injured motorcyclists are treated at public expense (Medicaid) and that the dependents of those killed in accidents receive public assistance.
a. Does the purchase of a motorcycle by an individual who does not wear a helmet create a negative externality? Explain.
b. If so, how should government set a no-helmet tax that would lead to a socially desirable level of motorcycle sales?