If an Economic Activity Results in External Costs as Well

question 209

Multiple Choice

If an economic activity results in external costs as well as private costs, economic theory would suggest that this activity should:

• A) be taxed.
• B) be prohibited.
• C) be subsidized.
• D) not be allowed.

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Definitions:

Self-Identity

An individual's conscious recognition of themselves, comprising elements such as personal values, beliefs, and characteristics.

Universal Spirit

A concept referring to an all-encompassing, omnipresent spiritual presence or force believed to exist throughout the universe.

Hegel

A German philosopher of the late Enlightenment period, known for his dialectical method and his contributions to absolute idealism.

Adam Smith

An 18th-century Scottish economist and philosopher known as the father of classical economics, best known for his works "The Wealth of Nations," which outlines the basis for free market economics.