CHAPTER 3 QUESTION 1

Aside from basic negative externalities mentioned in the chapter, like smoking and our bongo playing neighbors, issues like taxation on "gas guzzling" cars may affect my life. Now, none of my family members own a "gas guzzler" but I understand that if this tax was put into place it would still affect me. If we put taxes on cars that were "harmful to our environment" than more people would most likely start buying "healthy" cars which gives those "healthy" car companies the incentive to raise there prices which would lead to lack of competition in the market thus not keeping prices low. Perhaps I am taking that to the extreme, but could it happen? Maybe. Another issue that could affect me is drug price discrimination and prescription drug turning into over the counter drugs. Although I don't take as serious of medication for such things as HIV and AIDS, I can still see the affects of what would happen if there were to become a price discrimination. An opening in the black market and even potential drug wars. On the other hand, prescription medication that turns into over the counter drugs, that is a good thing. That means that the prices would most likely be cut by 80 to 90% thus meaning people could afford medication which would in turn make for a healthier society.