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:

Clinician

A health professional involved in the diagnosis, treatment, and care of patients.

Empiricism

A theory in philosophy that states knowledge comes only or primarily from sensory experience.

Speculation

The process of forming theories or conjectures without firm evidence, often in the context of financial investments.

Empirical

Concentrates on, is related to, or can be substantiated through empirical observation or personal experience rather than through theoretical speculation or pure logical analysis.