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.
Answer: A
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Industria and Agraria are two neighboring countries. Suppose Good X is the only good produced in both the countries and is a function of physical capital and efficiency units of labor
It is found that a one unit increase in capital leads to a higher increase in the production of Good X in Agraria than in Industria. What is the reason behind this if the number of efficiency units of labor in both the countries are equal?
Suppose the demand for wine is elastic and that initially 5 million bottles of wine are produced and consumed in the United States. If the government imposes a tax of $2 per bottle of wine, the government will collect
A) more than $10 million in tax revenues. B) $10 million in tax revenues. C) less than $10 million in tax revenues. D) an amount that may be more than, equal to, or less than $10 million in tax revenues depending on the precise elasticity of demand.