Suppose that alcohol consumption creates a negative externality. What can the government do to equate the equilibrium quantity of alcohol and the socially optimal quantity of alcohol?
a. impose a tax on alcohol that is equal to the per-unit externality
b. offer a subsidy on alcohol that is equal to the per-unit externality
c. impose a regulation limiting the amount of alcohol that each consumer can purchase
d. nothing
a
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You purchase a bag of chocolate chips for $3, a bag of flour for $1, a bag of sugar for $.50, a half dozen eggs for $.50, and a half pound of butter for $2. You use all these ingredients to make three dozen cookies. Your roommate offers you $15 for them, and you happily accept. How much does this process contribute to GDP?
A. $8 B. $7 C. $22 D. $15
Under the liquidity premium theory a flat yield curve implies:
A. long-term interest rates are higher than short-term interest rates. B. there is no risk premium for longer-term maturities. C. short-term interest rates are expected to remain constant. D. short-term interest rates are expected to decrease.