The specificity rule states that

A. Tax rates should vary according to specific characteristics of a product.
B. it is more efficient to use a policy tool that is closer to the distortion that is caused by an externality.
C. a government tax is the best remedial measure for an externality.
D. property rights must be changed to correct for an externality.


Answer: B

Economics

You might also like to view...

Refer to Table 2-5. Assume Nadia's Neckware only produces ascots and bowties. A combination of 24 ascots and 12 bowties would appear

A) along Nadia's production possibilities frontier. B) inside Nadia's production possibilities frontier. C) outside Nadia's production possibilities frontier. D) at the horizontal intercept of Nadia's production possibilities frontier.

Economics

Economist Douglass North's definition of institutions:

A. is the rules of the game in a society. B. is the humanly devised constraints that shape human interactions. C. includes laws enforced by the government as well as cultural norms. D. All of these statements are true.

Economics

Which of the following is a reason that the number of bank failures has generally decreased over time?

a. Banks have been replaced by savings and loan associations. b. The overall riskiness of bank loans has decreased. c. The Federal Reserve stands ready to inject reserves into the banking system. d. All banks have been in good financial health. e. Banks hold most of their assets in the form of reserves.

Economics

The demand for a good is inelastic with respect to price if the price elasticity of demand is:

A. less than one. B. greater than one. C. equal to one. D. equal to negative one.

Economics