A government action that can help correct positive externalities is
A. an effluent fee charged to producers of the good that provides external benefits.
B. a subsidy to consumers of the good that provides external benefits.
C. a tax on producers of the good that provides external benefits.
D. regulations aimed at reduced production by sellers of the good that provides external benefits.
Answer: B
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A budget line is a straight line designed to show
A. how income is related to hours worked. B. all combinations of two goods that can be purchased with a given income. C. the way a homemaker should divide money among several commodities. D. that if more money is spent on one good, the breadwinner must work all the harder to maintain a satisfactory level of living. E. preferences for goods and services.
Sun's Gas Station is a firm operating in a perfectly competitive industry. Sun's Gas Station sells each gallon of gas for $3. What is the marginal product from hiring the fourth worker?
A) 70 gallons of gasoline B) 280 gallons of gasoline C) 40 gallons of gasoline D) 80 gallons of gasoline
The stock of high-powered money in the economy is $80 billion. The bank reserve-holding ratio is 0.12 and the public wishes to hold 10% of its deposits as cash. The money supply will be approximately
A) $363 billion assuming the 80 billion of high-powered money is held by banks. B) $400 billion assuming the 80 billion of high-powered money is held by the Fed or in bank vaults. C) $327 billion assuming the 80 billion of high-powered money is not held by the Fed or in bank vaults. D) $425 billion assuming the 80 billion of high-powered money is held by banks.
How can increased competition lead to some form of imperfect competition, such as an oligopoly?
What will be an ideal response?