If the production of a particular good involves significant external benefits, to force the externality to be internalized the government might:
a. impose a tax on production of the good in order to increase production.
b. impose a tax on production of the good in order to decrease production.
c. offer a subsidy for production of the good in order to increase production.
d. offer a subsidy for production of the good in order to decrease production.
c
You might also like to view...
Normally, a firm's borrowing cost is the expected real interest rate, which takes expected inflation into account. With price stickiness, however, the firm will consider only:
a. expected inflation. b. expected wages. c. the nominal rate of interest. d. the expected appreciation of the asset.
If the demand for a monopoly's output shifts leftward, the change in quantity produced is NOT predictable because
A) the monopoly is a profit maximizer. B) the monopoly is a price taker. C) the monopoly has no supply curve. D) the monopoly's marginal cost curve might not be upward sloping.