An Appropriate Way for Government to Intervene When External Diseconomies

question 26

Multiple Choice

An appropriate way for government to intervene when external diseconomies exist in an industry is to

• A) shift the industry demand curve to the right by subsidizing consumers.
• B) shift the industry supply curve to the left by taxing producers.
• C) subsidize the industry to raise its profits.
• D) encourage imports of the good to replace domestic production.
• E) make the industry's supply curve more nearly reflect the supply curve of a competitive industry.

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Definitions:

Activity Cost Pool

Refers to a grouping of all costs related to a specific activity used in activity-based costing to allocate overhead costs more accurately to products or services.

Activity-Based Costing

A method of costing that assigns costs to products or services based on the activities they require.

Activity Rate

The measure used to allocate costs to activities based on their use of resources.

Activity Cost Pool

A grouping of all the costs related to a particular activity, used in activity-based costing to more accurately allocate costs to products or services.