Consider a Setting in Which There Is a Negative Externality,but

question 73

Multiple Choice

Consider a setting in which there is a negative externality,but no positive externality.The market outcome is __________________; government can bring about the ___________________ outcome if it sets a tax equal to the __________________.

• A) efficient; inefficient; MSC
• B) efficient; inefficient; MEC
• C) inefficient; efficient; MEC
• D) inefficient; efficient; MPC
• E) inefficient; efficient; MSB

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Definitions:

New Equity

Capital raised by a company through the issuance of common or preferred stock, increasing the shareholders' equity.

Firm's Growth Rate

The rate at which a company is expanding in terms of revenue, size, or market share.

Annual Dividend

The total dividend payments a company makes to its shareholders in a year, often divided into quarterly payments.

Return Requirement

The minimum expected return an investor requires from an investment to make it worthwhile, considering the risk involved.