If the Government Wishes to Encourage Firms to Internalize Externalities

question 273

Multiple Choice

If the government wishes to encourage firms to internalize externalities, they should ________ activities resulting in negative externalities and ________ activities resulting in positive externalities

• A) tax; subsidize
• B) subsidize; tax
• C) ban; generate
• D) place an injunction against; tax

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Definitions:

Technological Advancement

The process of developing new technologies and improving existing ones to enhance productivity, efficiency, and quality of life.

Labor Force

Refers to the total number of people available to work, including both the employed and those seeking employment.

Unique Risks

Specific threats or vulnerabilities that are distinct to an individual, organization, project, or activity.

Competition Among Firms

The rivalry between businesses in the same industry for customers, market share, or resources, driving innovation and efficiency.