To Correct for an External Benefit, the Government Should

question 63

Multiple Choice

To correct for an external benefit, the government should:

• A) set a tax equal to the amount by which marginal private cost exceeds the marginal social cost
• B) set a tax equal to the amount by which marginal social cost exceeds the marginal private cost
• C) provide firms with a subsidy for the amount by which marginal private benefit exceeds the marginal social benefit
• D) provide firms with a subsidy for the amount by which marginal social benefit exceeds the marginal private benefit

---

Definitions:

Social Cognition

The study of how people process, store, and apply information about others and social situations, influencing understanding, attitudes, and behaviors.

Cognitive Dissonance

The psychological conflict resulting from holding two or more contradictory beliefs, values, or attitudes simultaneously.

Sociolinguistics

The study of how language is influenced by social factors, including cultural norms, expectations, context, and the identity of speakers and listeners.