When a Firm Generates External Benefits, a More Efficient Outcome

question 93

Multiple Choice

When a firm generates external benefits, a more efficient outcome would result if

• A) the firm produced a larger output level.
• B) the firm reduced its output level.
• C) a tax were levied on the firm equal to the dollar amount of the externalities.
• D) price were fixed below the firm's per-unit cost.

---

Definitions:

Individual Freedom

The liberty of individuals to act, speak, or think without hindrance or restraint, except by laws designed to protect the freedom and safety of others.

Corporate Timber Production

The industrial-scale harvesting and processing of timber by private corporations, often involving extensive logging operations.

Morrill Land-Grant Act

Legislation passed in 1862 that provided states with land to finance the establishment of colleges specializing in agriculture and the mechanical arts.

Public Lands

Land owned by the government, open for use and development by the public or preserved for environmental protection or cultural significance.