Where a firm generates beneficial externalities, society would be better off if
a. the firm produced a larger output level.
b. the firm reduced its output level.
c. a tax was levied on the firm equal to the dollar amount of the externalities.
d. price was reduced below marginal private cost.
a
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The economic principle of _________________ implies that the value of the subject property is determined by the price that market participants would pay to acquire a substitute property of similar utility and desirability,
Fill in the blank(s) with the appropriate word(s).
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower