Assume the Production of a Good Gives Rise to External

question 107

Multiple Choice

Assume the production of a good gives rise to external benefits. The government may increase efficiency by

• A) subsidizing consumption of the good.
• B) requiring all producers of the good to be licensed.
• C) taxing production of the good.
• D) imposing taxes on the good.

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Definitions:

Marginal Cost

The increase in total cost that arises from producing one additional unit of a product or service.

Market Output

The total quantity of goods or services produced and supplied in a market at a given time.

First-move Ability

The advantage or strategic benefit gained by being the first to act or move in a given situation, often discussed within the context of game theory and competitive scenarios.

Optimal Output

The level of production where a firm maximizes its profits or minimizes its losses.