Although the reciprocal nature of the problem suggest that the proceeds of a corrective tax not be paid to as compensation to those harmed, if compensation is paid to those harmed by externalities _____
a. the payment should be made from general revenues to keep the corrective action separate from the compensatory part
b. the payment should be set equal to marginal external cost
c. the payment should be made in one lump sum to minimize incentives to create future problems
d. the payment should be double the amount of the corrective tax to justly compensate the victims
c
You might also like to view...
The Wong family consumes 3 pounds of fish and 5 pounds of chicken per month. The price of fish is $8 per pound and chicken is $4 per pound
a. What is the amount of income allocated to fish and chicken consumption? b. What is the price ratio (the price of fish relative to the price of chicken)? c. Explain the meaning of the price ratio you computed. d. If the Wongs maximize utility, what must the ratio of the marginal utility of fish to the marginal utility of chicken be equal to? e. If the price of chicken rises, will the Wong family consume more chicken, less chicken, or the same amount of chicken? Explain your answer using the rule of equal marginal utility per dollar.
Government's unfunded liabilities:
A. result from the political bias toward immediate benefits and deferred costs. B. result in more efficient policies in an attempt to satisfy these liabilities. C. are caused primarily by market failures. D. only occur in democratically elected governments.