Government Can Internalize Externalities by

question 91

Multiple Choice

Government can internalize externalities by

• A)taxing goods with negative externalities and subsidizing goods with positive externalities.
• B)taxing goods with positive externalities and subsidizing goods with negative externalities.
• C)taxing goods with either positive or negative externalities.
• D)subsidizing goods with either positive or negative externalities.
• E)letting private markets determine output levels.

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Definitions:

Comparative Advantage

The proficiency of an individual or group in executing a certain economic function more effectively than other tasks.

Lowest Cost

The scenario in which the expenditure required to achieve a certain objective or to purchase goods and services is minimized.

Opportunity Cost

The act of sacrificing possible gains from alternative decisions when one is made.

Freight Train

A freight train is a train composed of freight cars for the purpose of transporting goods and materials rather than passengers.