Public Goods and Responsibility Quiz

Weavemore Textiles is dumping pollutants into the Green River, causing problems with the water supply for the Hide-Away Hotel, four miles downstream. Thus far, Weavemore has taken no steps to correct the problem. The MOST LIKELY way in which the government might deal with this situation would be to...

• subsidize a general research program to deal with water pollution.
• subsidize the operation of the Hide-Away Hotel.
• impose a tax on Weavemore Textiles.
• do nothing since any interference could jeopardize the efficiency of the price system.

The experience of Proposition 13 in 1978 tends to illustrate the fact that during the late 1970s most California voters...

• had more faith in the government than in the private sector to solve problems.
• were willing to accept a higher tax rate if it meant assurance of increased government services.
• wanted more emphasis on property taxes as a source of local funds.
• felt that local government services were no longer worth the tax costs.

The benefit principle of taxation states that...

• tax rates should be the same for everyone, regardless of circumstance.
• all consumers should have access to public goods, regardless of tax rate.
• people who receive more from a government service should pay more to support it.
• the benefits derived from public goods should exceed the costs required to finance those goods.