In Order to Encourage Consumption of a Good That Generates

question 48

Multiple Choice

In order to encourage consumption of a good that generates positive externalities, policymakers would:

• A)impose a tax on the amount consumed in order to achieve the socially optimal level.
• B)mandate consumption of the good at the socially optimal level.
• C)provide a subsidy per unit of the good consumed in order to achieve the socially optimal level.
• D)do nothing, since the market will achieve the socially optimal level without government intervention.

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Definitions:

Injunction

A court order requiring a party to do or to refrain from doing specific acts.

Equitable Remedy

Remedies granted by courts in situations where monetary compensation is insufficient to address the harm or violation, including injunctions or specific performance.

Limitation Period

The period of time within which legal action must be taken.

Warranty

A promise or guarantee, typically provided by a seller or manufacturer, regarding the condition, functionality, or quality of a product.