Refer to the Competitive Market Diagram for Product Z

question 106

Multiple Choice

Refer to the competitive market diagram for product Z. Assume that the current market demand and supply curves for Z are D₂ and S₂. If there are substantial external costs associated with the production of Z, then

• A)a price lower than B and an output greater than G would improve resource allocation.
• B)government should levy a per-unit excise tax on Z to shift the demand curve to the right.
• C)government should levy a per-unit excise tax on Z to shift the supply curve toward S₁.
• D)government should subsidize the production of Z to lower equilibrium price and increase equilibrium output.

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Definitions:

Profit Sharing

A company policy of distributing a portion of its profits to its employees.

Cost Reductions

Strategies or actions taken to decrease expenses and improve financial efficiency.

Group Incentive Pay

A compensation system where a team of employees is rewarded collectively based on the group's overall performance.

Job Characteristics Model

A framework that proposes that five core job dimensions lead to critical psychological states, affecting motivation, job satisfaction, and job performance.