If the production of a particular good involves significant external benefits, to force the externality to be internalized the government might:
a. impose a tax on production of the good in order to increase production.
b. impose a tax on production of the good in order to decrease production.
c. offer a subsidy for production of the good in order to increase production.
d. offer a subsidy for production of the good in order to decrease production.
c
You might also like to view...
Suppose a recession occurs as a result of a supply shock, and instead of the economy naturally working its way back to equilibrium, the government uses policy to shift the aggregate demand curve to fight the recession. Using policy this way would
A) quickly result in a new, higher level of real GDP and a permanently lower price level. B) bring real GDP back to potential GDP more slowly but would bring the price level back to the original price level more quickly. C) bring the price level back to its original level more quickly but would result in a permanently lower level of potential GDP. D) bring real GDP back to potential GDP more quickly but would result in a permanently higher price level.
The demand for Farm fresh brand apple juice is likely to be:
A. very price elastic, because there are many close substitutes available. B. less price elastic, because there are many close substitutes available. C. very price elastic, because the adjustment time is so fast. D. less price elastic, because the adjustment time is so slow. AACSB: Reflective Thinking
In any year, nominal GDP divided by the GDP chain price index equals real GDP
a. True b. False Indicate whether the statement is true or false
If three paper product companies are in an agreement, this is an example of a ________ agreement.
A) leftward B) horizontal C) rightward D) vertical