Scenario 10-1 The Demand Curve for Gasoline Slopes Downward and the Supply

question 24

Multiple Choice

Scenario 10-1
The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 400th gallon of gasoline entails the following:
a private cost of $2.83;
a social cost of $3.12;
a value to consumers of $3.23.
-Refer to Scenario 10-1. Suppose the dollar amount of the externality, per gallon of gasoline, is constant, regardless of how much gasoline is produced. Then the externality could be internalized if producers of gasoline were

• A)provided a subsidy of $0.11 per gallon of gasoline sold.
• B)provided a subsidy of $0.29 per gallon of gasoline sold.
• C)required to pay a tax of $0.29 per gallon of gasoline sold.
• D)required to pay a tax of $0.11 per gallon of gasoline sold.

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Definitions:

Maslow's Needs

Refers to Abraham Maslow's hierarchy of needs, a motivational theory in psychology comprising a five-tier model of human needs, from physiological needs to self-actualization.

Holistic-Dynamic Theory

A psychological perspective that considers an individual as a whole, integrating motivational, emotional, and cognitive components.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, structured as a pyramid with basic needs at the base and self-actualization at the top, illustrating human motivational drivers.

Safety Needs

As part of Maslow's hierarchy of needs, these are fundamental requirements for security and protection from physical and emotional harm.