Which Policy Would Best Suit a Positive Externality

question 145

Multiple Choice

Which policy would best suit a positive externality?

• A)taxes
• B)pollution permits
• C)regulation
• D)subsidies

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Definitions:

Marginal Revenue Product

The additional revenue generated by employing one more unit of a resource, such as labor or capital.

Resource Price

The cost of inputs used in the production of goods or services, such as labor, raw materials, and capital.

Marginal Product

The additional output produced as a result of adding one more unit of a specific input, while holding other inputs constant.

Total-Product Schedule

A table that shows the output of goods or services that a firm can produce with different combinations of input resources.