A Negative Externality Such as Pollution Can Be Corrected by

question 54

Multiple Choice

A negative externality such as pollution can be corrected by

• A) a subsidy to producers.
• B) a tax on producers.
• C) a subsidy to consumers.
• D) a stimulus to production.

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Definitions:

Subsidize

The act of providing financial assistance to individuals, businesses, or industries to support or promote economic activities.

Basic Research

Fundamental scientific research aimed at increasing understanding and knowledge, without specific immediate commercial applications.

Free-Rider Problem

A situation in which individuals consume more than their fair share of a public resource, or shoulder less than a fair share of the costs of its production, because they are not charged for their usage.

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be used by everyone and one person's use does not reduce availability to others.