When a Positive Externality Is Present in a Market, the Imposition

question 50

Multiple Choice

When a positive externality is present in a market, the imposition of a government subsidy ensures:

• A)a fair distribution of surplus.
• B)an efficient outcome.
• C)that those who enjoy the benefit receive the surplus.
• D)All of these are true.

---

Definitions:

Luxury Good

A high-end item that is not necessary for living but is deemed as highly desirable within a culture or society.

Baseball Cards

Collectible items featuring baseball players that are traded and collected by enthusiasts.

Price Inelastic

Describes a situation where the quantity demanded or supplied of a good or service changes by a smaller percentage than the percentage change in price.

Cross Elasticity

A measure of how the quantity demanded of one good responds to a change in the price of another good.