To eliminate the inefficiency resulting from an external cost of production, the government can impose a tax on producers that is equal to the

Which of the following is an example of market "production," as used by economists?

A) Katrina works as a cashier at the local produce stand. B) Heidi makes a pizza for her family's dinner. C) Garvey takes out a low-cost government loan to start his pet-sitting business. D) The theatre and film studies department in Fine Art's College stages a play at the local theatre.

A corrective tax can improve upon the misallocation of resources resulting from an externality _____

a. only if the externality is positive b. only if it is easy to quantify the external damage c. transactions costs are low d. transactions costs are zero