If the production of a product results in significant external costs, an appropriate government policy might be to
A. subsidize consumers since the good is being under-consumed.
B. subsidize the production of the good.
C. tax consumers' incomes and thus shift the demand curve to the left.
D. tax producers and thus shift the supply curve to the left.
Answer: D
You might also like to view...
What is a patent?
What will be an ideal response?
Between 1864 and 1900, the largest portion of railroad track (as a percentage of total annual construction) was laid in which region of the U.S.?
a. the Southeast b. the Northeast c. the Pacific Northwest d. the Great Plains region
Which of the following carries out the distribution process by rationing goods on the basis of preferences and relative incomes?
A. Administered system B. Government C. Price system D. Central planning
Which of the following statements is most likely true?
a. In the long term, low or moderate levels of inflation may not pose an overwhelming difficulty for business planning because costs of doing business and sales revenues may rise at similar rates. b. In the short term, high levels of inflation may not pose an overwhelming difficulty for business planning because costs of doing business and sales revenues may rise at similar rates. c. In the long term, high levels of inflation may not pose an overwhelming difficulty for business planning because costs of doing business and sales revenues may rise at similar rates. d. In the short term, low or moderate levels of inflation may not pose an overwhelming difficulty for business planning because costs of doing business and sales revenues may rise at similar rates.