Use the Following to Answer Questions

question 184

Multiple Choice

Use the following to answer questions:
Figure: PPF Goods X & Y
-(Figure: PPF Goods X & Y) Refer to the figure. Point A represents an allocation of resources that is:

• A) efficient.
• B) inefficient.
• C) impossible.
• D) the result of trade.

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Definitions:

Pollution Permits

Legal rights granted by governments to emit a specific amount of pollutants into the environment.

Corrective Tax

A tax designed to incentivize socially desirable behavior, often used to correct for the negative externalities of an action or consumption.

Coase Theorem

A principle that asserts that if private parties can bargain over the allocation of resources without cost, they can solve the problem of externalities on their own.

Externalities

Economic outcomes that impact third parties not directly involved, which can either be advantageous or disadvantageous.