When Dealing with Consumption Externalities, the Market Equilibrium Can Be

question 92

Multiple Choice

When dealing with consumption externalities, the market equilibrium can be moved closer to the social equilibrium by:

• A)taxing negative externalities and subsidising positive externalities
• B)taxing both positive and negative externalities
• C)subsidising both positive and negative externalities
• D)none of the above because government has no corrective policy with regards to consumption externalities

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Definitions:

Fixed Cost

Expenses that do not change with the level of output or sales in the short term, such as rent, salaries, and insurance.

Insurance Payment

A sum of money paid regularly to an insurance company for a policy, which provides financial protection against loss or harm.

Shipping Charges

The fees associated with the transport of goods from the seller to the buyer, often based on factors like weight, distance, and delivery speed.

Factors Of Production

The resources used to create goods or services, typically categorized into land, labor, capital, and sometimes entrepreneurship.