If the Government Wishes to Encourage Firms to Internalize Externalities

question 125

Multiple Choice

If the government wishes to encourage firms to internalize externalities, they should tax activities resulting in ________ externalities and subsidize activities resulting in ________ externalities.

• A) negative; positive
• B) positive; negative
• C) no; positive
• D) negative; no

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Definitions:

Industrial Development

The process of building up a country's capacity to process raw materials and manufacture goods for consumption or export.

Canadian Labor Law

The body of laws regulating employment, unions, and collective bargaining in Canada.

Decentralization

The distribution of decision-making powers and responsibilities away from a central authority to regional or local authorities or to individual units within an organization.

Business Flexibility

The ability of a company to adapt to changes in the market or industry, altering operations or structures to meet new challenges.