Use the Following to Answer Questions

question 190

Multiple Choice

Use the following to answer questions:
-(Table: Externalities from Parks) The table Externalities from Parks shows the marginal social benefit and the marginal social cost of preserving various amounts of land in a city for a public park. If the government wants to achieve the optimum amount of land for the park, it could use a Pigouvian _____ of _____.

• A) tax; $300
• B) tax; $150
• C) subsidy; $150
• D) subsidy; $450

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Definitions:

Corporate Bonds

Debt securities issued by corporations to raise capital, with promise to repay the principal amount along with specified interest rates over a period.

Real Return

The return on an investment after adjusting for inflation, reflecting the actual purchasing power gained or lost.

Inflation

The speed at which the overall price level for goods and services increases, leading to a decrease in buying power.

Corporate Bond

A debt security issued by corporations to raise capital, with the promise to pay back the principal along with interest.