If a Good That Generates Negative Externalities Was Priced to Take

question 41

Multiple Choice

If a good that generates negative externalities was priced to take into account these negative externalities, then its:

• A)price would decrease and its output would increase.
• B)output would increase but its price would remain constant.
• C)price would increase and its output would decrease.
• D)price would increase but its output would remain constant.

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Definitions:

Ego

In Freudian theory, the part of the personality that mediates among the demands of the id, the superego, and reality.

Preconscious

The part of the mind containing contents that are not in immediate awareness but can be accessed easily.

Reality Principle

A psychoanalytic concept referring to the capacity of the mind to assess the external world and act upon it appropriately, as opposed to acting on the pleasure principle.

Pleasure Principle

A psychoanalytic concept that describes people's instinctual seeking of pleasure and avoidance of pain to satisfy biological and psychological needs.