Suppose That Alcohol Consumption Creates a Negative Externality

question 353

Multiple Choice

Suppose that alcohol consumption creates a negative externality. What can the government do to equate the equilibrium quantity of alcohol and the socially optimal quantity of alcohol?

• A)impose a tax on alcohol that is equal to the per-unit externality
• B)offer a subsidy on alcohol that is equal to the per-unit externality
• C)impose a regulation limiting the amount of alcohol that each consumer can purchase
• D)nothing

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Definitions:

Injunction

A court order either forcing a party to do something or prohibiting a party from doing something.

Digestive Problem

Health issues related to the digestive tract, which can include symptoms like stomach pain, bloating, and indigestion.

Creaky

Emitting or making a sharp, harsh, grating, or squeaking sound, often used to describe old or worn-out objects.

Substantially Performed

A legal concept in contract law indicating that a party has completed enough of its obligations to warrant payment, even if minor details remain.