Positive externalities arise when
A. a profitable firm is regulated.
B. tax rates are reduced.
C. an unprofitable firm is shut down.
D. production of a good generates benefits that spill over to third parties.
Answer: D
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Over the past fifty years, there has been substantial closure of the gap in real GDP per person between which of the following groups of countries?
A) the United States and Central and South America B) Africa and Western Europe C) Central and South America and Africa D) the United States and Japan
The government is seen by many economists to be the agency that best resolves the problem of negative externalities because it
a. can create positive externalities that compensate for the negative ones b. has access to more information than any private firm or individual and can act more objectively than any private firm or individual c. is the only one affected by negative externalities d. gains the most from negative externalities e. has the power to distribute the bonuses resulting from negative externalities