Question

A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. Rain barrels provide an external benefit to the community through water conservation. What can the government do to equate the equilibrium quantity of rain barrels and the socially optimal quantity of rain barrels? a. ​impose a tax on rain barrels that is equal to the per-unit externality b. ​offer a subsidy on rain barrels that is equal to the per-unit externality c. ​encourage homeowners to bargain with rain barrel producers d. nothing​

Answer 1

a. ​impose a tax on rain barrels that is equal to the per-unit externality. Explanation:

The rain barrel is necessity and required to meet the scarcity of water during dry areas. This clearly is a major task to regulate the use of rain barrels, as wastage of water of rain barrels will create a problem. For this the government can take various steps to regulate the use of rain barrels.

For this if government puts taxes on excess use of rain barrels then it would impact people's thinking as there will be a cost associated with it.

Thus, correct option is:

Statement a.