What type of policy does the government adopt in dealing with government-inhibited goods?
A) It subsidizes their consumption.
B) It subsidizes their production.
C) It provides them as public goods.
D) It taxes, regulates, or prohibits their use.
Answer: D
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All of the following would be potential problems if developing nations around the world emphasized export promotion EXCEPT
A) industrial nations may be unable to absorb the exports of many newly industrializing nations. B) it would be much harder to emphasize exports under the WTO framework if the emphasis in exports requires some kind of subsidies. C) export growth may not add to GDP if it crowds out growth in output of goods for domestic consumption. D) current research has clearly established that there is no causal connection between exports and faster economic growth.
If demand for clean water is specified as P = 140 – 2Q, and the market price is $40, then consumer surplus at that price level is
a. $2500 b. $3000 c. $1600 d. $50