(7, 5) thx

The statements refer to methods used with regard to both positive and negative externalities. Identify the statements as either true or false. Each term is used more than once. Forbidding the use of asbestos, a cancer-causing material, in construction through the use of legislation is an example of directly regulating a negative externality. If a company incurs a tax because it generates pollution, the tax will force the company to stop polluting. With respect to pollution, it is easy to determine and provide compensation through liability rules. An efficient solution to a negative externality such as noise pollution is to avoid it, provided that there is enough incentive to do so. The government can use subsidies or tax breaks to encourage activities with positive externalities. Answer Bank false true