If the Production of a Particular Good Involves Significant External

question 150

Multiple Choice

If the production of a particular good involves significant external benefits, what might the government do to force the externality to be internalized?

• A) Impose a tax on production of the good in order to decrease production.
• B) Impose a tax on production of the good in order to increase production.
• C) Offer a subsidy for production of the good in order to increase production.
• D) Use a production permit for the good in order to decrease production.

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Definitions:

Social Structure

The organized pattern of social relationships and social institutions that together compose society, influencing behaviors and relationships.

Neolithic

The New Stone Age; a prehistoric period beginning about 10,000 years ago in which peoples possessed stone-based technologies and depended on domesticated crops and/or animals for subsistence.

Division of Labor

The allocation of different tasks and responsibilities to different individuals or groups, typically to increase efficiency in production or services.

Diffusion

The spread of certain ideas, customs, or practices from one culture to another.