If the production of a product results in significant external costs, an appropriate government policy might be to
A) subsidize the production of the good.
B) tax producers and thus shift the supply curve to the left.
C) tax consumers' incomes and thus shift the demand curve to the left.
D) subsidize consumers since the good is being under-consumed.
Answer: B
You might also like to view...
If a market is contestable, then
A. long-run economic profits are minimal due to inefficiency. B. long-run economic profits are zero. C. short-run and long-run economic profits are zero. D. positive economic profits are maximized due to the efficient production spurred by the threat of entry.
Low inflation rates and high inflation rates impose different costs on society.
Answer the following statement true (T) or false (F)
A free market fails when
A) there is government intervention. B) there is an external effect in either production, consumption, or both. C) firms that produce goods which create positive externalities go bankrupt. D) firms that produce goods which create negative externalities earn high profits.
Under block pricing, a company might
A. charge a customer different prices per unit, depending on the number of units purchased. B. provide a customer different units, depending on the price the consumer bids. C. charge a customer different prices per unit, depending on the customer's loyalty. D. charge a customer different prices per unit, depending on the price the consumer bids.