Suppose That Candy Producers Create a Positive Externality Equal to $1

question 110

Multiple Choice

Suppose that candy producers create a positive externality equal to $1 per pound of candy. Further suppose that the government offers a $1-per-pound subsidy to the producers. What is the relationship between the equilibrium quantity and the socially optimal quantity of candy?

• A)The equilibrium quantity is greater than the socially optimal quantity.
• B)The equilibrium quantity is less than the socially optimal quantity.
• C)They are equal.
• D)There is not enough information to answer the question.

---

Definitions:

Union Rights

The legal rights and protections afforded to labor unions and their members, including the right to organize, bargain collectively, and engage in strikes.

Labor-Management Partnership

An arrangement where labor unions and management work together cooperatively to make decisions and solve problems, with the goal of improving service delivery and organizational efficiency.

Daily Work-Related

Pertaining to the tasks, activities, and responsibilities that are part of an individual's routine job on a day-to-day basis.

Traditional Management

A leadership approach characterized by hierarchical organizational structures and clear, top-down directives focused on efficiency and control.