The government has identified a situation where the production of a good is creating a negative externality. The government should enact legislation to require firms to internalize the externality
A) in all such cases.
B) if the benefits of doing so outweigh the costs.
C) as long as it will not increase the price of the good being produced.
D) as long as it will not create unemployment in this industry.
E) as long as there are positive health benefits associated with this policy.
Answer: B) if the benefits of doing so outweigh the costs.
You might also like to view...
GDP would be a better measure of economic well-being if it included:
A. the value of leisure. B. the market value of final goods. C. the total value of intermediate goods. D. the costs of education.
The central bank of the United States is:
A. the Federal Reserve System. B. Bank of America. C. Bank of the United States. D. the U.S. Treasury.
Which of the following is an example of a positive externality? a. A firm emits pollution into the air, harming members of society
b. An auto body shop makes a lot of noise, reducing the property values of nearby homes. c. A coastal dairy farmer's undeveloped land offers unimpeded views of the ocean for a nearby neighborhood. d. You go to a store and pay $0.65 for a candy bar that you then eat.
In the short run, an increase in real GDP will
a. increase unit costs and increase the price level b. increase unit costs and decrease the price level c. decrease unit costs and decrease the price level d. decrease unit costs and increase the price level e. have no effect on unit costs or the price level