Paternalism is the view that ________
A) consumers do not always know what is best for them, and the government should encourage or induce them to change their actions
B) producers do not always have the resources required for the production of a good, and the government should provide them with these resources
C) the government should impose a tax on an economic activity only if it generates a negative externality
D) the government has the supreme power to decide which goods are to be taxed and which are to be subsidized
A
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Lower transaction costs are a benefit of fixed exchange rates. Therefore, relative prices in two trading nations linked by fixed exchange rates should:
A) experience more price divergence. B) experience more price convergence. C) have less arbitrage and more speculation. D) have lower costs of production.
Refer to the figure above. If the monopolist faces a constant marginal cost of $2, at what price should it sell its output?
A) $2 B) $6 C) $10 D) $12