When an industry is characterized by technology spillover, what should the government do to ensure that the market equilibrium equals the socially optimal equilibrium?
a. Impose a tax greater than the value of the technology spillover.
b. Not allow production of any product that causes a technology spillover.
c. Provide a subsidy equal to the value of the technology spillover.
d. Require producers to "clean up" any spillover that results from their production process.
c
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Suppose the value of income elasticity of demand for a private college education is equal to 1.5 . This means that
a. every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education b. every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education c. a 10 percent increase in income causes a 15 percent increase in the quantity of private college education purchased d. a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased e. a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent
Suppose that the government goes into deficit in order to help local school districts build better schools. Does this burden future generations?
If businesses and consumers become pessimistic, the Federal Reserve can attempt to reduce the impact on the price level and real GDP by
a. increasing the money supply, which raises interest rates. b. increasing the money supply, which lowers interest rates. c. decreasing the money supply, which raises interest rates. d. decreasing the money supply, which lowers interest rates.
What is the U.N.'s goal for foreign aid to poor countries? Are most countries currently meeting this goal? Explain.
What will be an ideal response?