If the Detriment to Society from a Negative Externality Is

question 46

Multiple Choice

If the detriment to society from a negative externality is measure as $5 per unit of output of a particular good, the best way of moving closer to the social optimum would be to:

• A)subsidize consumers who purchase the good by $5 per unit to offset the negative externality that they may endure.
• B)limit the production of the good to four days per week.
• C)calculate the negative value of the externality and assess a fine on each producer to pay for clean up in proportion to their profits from production of the good.
• D)assess a simple tax of $5 per unit of production on suppliers of the good.

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Definitions:

Holt-Winters Additive Model

A forecasting technique that captures seasonality, trend, and level in time series data, adding them together for prediction.

Exponential Smoothing

It is a rule of thumb technique for smoothing time series data using the exponential window function.

Additive Model

A statistical model where the effect of variables is linear and additive, assuming each variable contributes a separate and additive amount to the final outcome.

Exponential Smoothing Model

A time series forecasting method that applies weighted averages of past observations, decreasing exponentially as the observations get older.