Where a firm generates beneficial externalities, society would be better off if
a. the firm produced a larger output level.
b. the firm reduced its output level.
c. a tax was levied on the firm equal to the dollar amount of the externalities.
d. price was reduced below marginal private cost.
a
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During the mid-2000s, the average price of a used car fell by nearly $500 and the quantity sold nation-wide decreased by several thousand each year. This set of results is a contradiction of the law of demand
Indicate whether the statement is true or false
Which of the following statements is TRUE?
A) A growing economy should see a decline in relative poverty but not in absolute poverty. B) A growing economy should see a decline in absolute poverty but not in relative poverty. C) A growing economy should see a decline in both absolute and relative poverty. D) A growing economy is usually unrelated to changes in either absolute or relative poverty.
Suppose a bond sells for $2,000 and pays $200 per year in interest. What will happen to the current interest rate if the price of the bond changes to $1,800?
a. It decreases by 10 percentage points. b. It increases by 10 percentage points. c. It remains unchanged. d. It increases by 1 percentage point. e. It decreases by 1 percentage point.
Explain how government policies that redistribute income from the rich to the poor might reduce efficiency