When a Negative Externality Exists in the Production of a Good

question 61

Multiple Choice

When a negative externality exists in the production of a good,

• A)an appropriate policy would result in an increase in the output of the good.
• B)an appropriate policy would result in a decrease in the price of the good.
• C)a tax on the production of that good could correct for the externality.
• D)government could correct the externality by shifting the good's supply curve to the right.
• E)subsidizing the production of the good could correct for the externality.

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