Question

The U.S. used to produce a lot of clothing but no longer does. What is the most likely reason for this? Explain

A. Demand for clothing increased and U.S. manufacturers couldn’t expand

B. Increased U.S. tariffs on imported clothing

C. The domestic (U.S.) price of fabric increased

D. U.S. consumers prefer foreign-produced clothing

Which of the following would create a negative externality?

Explain why

A. A snowstorm destroys the Florida orange crop.

B. The FAA reroutes an airplane landing path over your house.

C. The government taxes alcoholic beverages.

D. The government removes a subsidy on vaccinations.

Answer 1

1. The U.S. used to produce a lot of clothing but no longer does. What is the most likely reason for this?

Correct Option: D. U.S. consumers prefer foreign-produced clothing.

Explanation: The consumer preference shifted against the domestically produced goods and service therefore, US manufacturer reduced their production against lower demand.

2. Which of the following would create a negative externality?

Correct Option: B. The FAA reroutes an airplane landing path over your house.

Explanation: The noise of plane will create the negative externality as the locals of that area will have to suffer from this even without getting compensation in return.