Government in a market system can increase economic efficiency by collecting taxes in order to subsidize the production of:
A. Goods with negative externalities
B. Goods with positive externalities
C. Private sector goods
D. Complementary goods
B. Goods with positive externalities
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Economists assume that households try to maximize utility and firms try to:
a. maximize profits. b. maximize scale of operation. c. maximize sales. d. maximize capital usage.
The scientific method is more difficult for economists than, say, chemists, because:
A) controlled laboratory conditions are more problematic in economics. B) it is difficult to hold other factors that may affect the variables being studied constant in economics. C) economic conditions may change quickly and unexpectedly. D) all of the above.
The incentive effect refers to how much a person will change his or her:
A. wage rate in response to a change in productivity. B. hours worked in response to a change in the wage rate. C. wage rate in response to a change in the tax rate on earnings. D. quantity demanded of a taxed good in response to a change in the tax rate.
For which pair of goods below would an increase in income have the same effect on both goods?
A. A normal good and a luxury good. B. A superior good and a normal good. C. A normal good and an inferior good. D. An inferior good and a luxury good.