If a Negative Externality Exists, __________ in Order for the Socially

question 172

Multiple Choice

If a negative externality exists, __________ in order for the socially optimal output to be reached.

• A)supply needs to increase
• B)supply needs to decrease
• C)demand needs to increase
• D)supply and demand both need to increase

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Definitions:

Clean Air

Air that is free from pollutants and contaminants, ensuring environmental quality and public health.

Consumption

The use of goods and services by households or individuals for personal satisfaction or to fulfill their needs.

Artificially Excludable

Describes goods or services from which individuals can be prevented from using unless they comply with certain conditions, despite there being no natural reason for exclusion.

License Fee

A charge paid for obtaining legal permission to carry out a particular activity or to use a particular piece of intellectual property.