In Market X, the External Benefit of Consumption Is $5

question 184

Multiple Choice

In Market X, the external benefit of consumption is $5. In Market Y, the external cost of consumption is $10. Efficiency in both markets could be achieved by:

• A) a tax of $5 in Market X and a subsidy of $10 in Market Y.
• B) subsidizing both markets.
• C) taxing Market Y and subsidizing Market X.
• D) taxing both markets.

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Definitions:

Assignor

The party in a contract who transfers their rights or interests in a property or agreement to another party, known as the assignee.

Negligent Misrepresentation

A false statement made carelessly that causes someone to incur a loss or damage, often addressed in cases of fraud or deceit.

Innocent Misrepresentation

A false statement made without knowledge of its falsity, leading another to enter into a contract under false beliefs.

Duress

A situation where a person is compelled to act against their will or make a legal decision under the threat of harm.