Which of the following statements is false?
A. A subsidy can be used to internalize a negative externality; a tax can be used to internalize a positive externality.
B. Ronald Coase stressed the reciprocal nature of externalities.
C. One way to deal with negative externalities is for government to apply regulations directly to the activity that generates the externalities.
D. Simply because taxes and subsidies are sometimes used to adjust for negative and positive externalities, respectively, it does not necessarily follow that the socially optimal level of output will be reached.
Answer: A
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The magnitude of the slope of the indifference curve between steak and lobster is called the marginal rate of substitution
Indicate whether the statement is true or false
A logging company is considering logging an area for a current cost of $500 per acre to obtain a profit the next year for $600 per acre. The market rate of interest is 10 percent. Should the company make the investment?
A. Yes, the future value of the profit is greater than the present value of the cost B. No, the future value of the profit is less than the present value of the cost C. Yes, the present value of the profit is greater than the present value of the cost D. No, the present value of the profit is less than the present value of the cost