Due to a Firm Generating External Costs, the Government Decides

question 243

Multiple Choice

Due to a firm generating external costs, the government decides to ________ the firm. When this happens, the firm will produce ________ units of output than before the tax was imposed in order to continue maximizing profits.

• A) subsidize; fewer
• B) subsidize; more
• C) tax; fewer
• D) tax; more

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Definitions:

Ego

A component of Sigmund Freud's psychoanalytic theory, representing the rational part of the personality which mediates between the desires of the id, moral demands of the superego, and the realities of the external world.

Superego

In psychoanalytic theory, the part of the personality that acts as the moral center, guiding behavior to conform with societal norms and values.

Objectives

Goals or aims that are intended to be achieved through certain actions or tasks.

Superego

The superego is part of Freud's psychoanalytic theory, functioning as the moral component of personality, which internalizes societal norms and values.