If Some Activity Creates External Benefits as Well as Private

question 117

Multiple Choice

If some activity creates external benefits as well as private benefits, then economic theory suggests that the activity ought to be

• A)taxed.
• B)prohibited.
• C)subsidized.
• D)left alone.

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Definitions:

Vending Machine

An automated machine that provides items such as snacks, beverages, cigarettes, or lottery tickets to consumers after money, a credit card, or a specially designed card is inserted into the machine.

Consumer Surplus

The difference in the collective amount that consumers are poised and able to expend on a product or service and the amount they actually expend.

Consumer Surplus

The gap between the price consumers are prepared to pay for a product or service and the amount they end up spending.

Scented Candles

Candles infused with fragrances intended to release a pleasant aroma when lit, often used for ambience, aromatherapy, or decoration.