To Encourage Consumption of a Good That Generates Positive Externalities,the

question 163

Multiple Choice

To encourage consumption of a good that generates positive externalities,the BEST option for policymakers would be to:

• A)impose a tax on the amount consumed to achieve the socially optimal level.
• B)mandate consumption of the good at the socially optimal level.
• C)provide a subsidy per unit of the good consumed to achieve the socially optimal level.
• D)do nothing since the market will achieve the socially optimal level without government intervention.

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Definitions:

Old Jokes

Humorous anecdotes or remarks that have been widely known for a long period of time.

Hydraulic Car Smasher

A type of machine or mechanical press for flattening or crushing cars through the application of high-pressure hydraulic power.

Marginal Cost

The additional cost incurred by producing one more unit of a product or service.

Dispose of Cars

The process of disposing or getting rid of cars that are no longer wanted, which can include selling, recycling, or scrapping them.