To internalize a positive externality:
a. the consumers of a good could receive a subsidy equal to the external benefit resulting from the production or consumption of the good.
b. a producer's costs could be increased by an amount equal to the external benefit resulting from the production of the good.
c. consumers of the good could pay a tax equal to the external benefit resulting from the production or consumption of the good.
d. None of the above are correct.
a
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Why are many economists skeptical of the Fed's ability to fine tune the economy?
A) Monetary policy only affects output in the long run. B) Lags in policy make it difficult to properly time policy. C) Fiscal policy can be implemented more quickly than monetary policy. D) Monetary policy does not have any effect on output.
Which of the following provides support for the use of discretion in economic policy-making?
A) any policy rule that is based on a particular model will prove wrong if that model is wrong B) the existence of a political business cycle C) the conclusions of Friedman and Schwartz with respect to monetary and fiscal policy D) the Watergate scandal
In 2003, federal government expenditures as a percentage of GDP were around _____
a. 10 percent b. 20 percent c. 30 percent d. 40 percent
Time-series models
A. use dummy variables to control for time trend. B. cannot be replicated by another researcher. C. use dummy variables to control for cyclical variation. D. both a and b E. both b and c