If a Good Has an External Benefit, Efficiency Can Be

question 360

Multiple Choice

If a good has an external benefit, efficiency can be achieved by

• A) leaving the market unregulated.
• B) monopolizing the market.
• C) offering a private subsidy on the good equal to the external benefit.
• D) imposing a tax on the good equal to the external benefit.

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Definitions:

Percent

A unit of measure equivalent to one hundredth of a total; a way to express a number as a fraction of 100.

Corporate Income Tax

A tax imposed on the net income of corporations, calculated by deducting permissible expenses from gross income.

Federal Expenditures

Refers to the spending by the federal government, including spending on national defense, social security, and other public services.

National Debt

The total outstanding borrowing of a government, consisting of internal and external loans, accumulated over years of budget deficits.