One Way Government Could Intervene When External Diseconomies Exist in an Industry

question 10

Multiple Choice

One way government could intervene when external diseconomies exist in an industry is to act to

• A)shift the industry demand curve to the right.
• B) shift the industry supply curve to the left.
• C) subsidize the industry to raise its profits.
• D) encourage increased production of the industry's product.
• E) make the industry's supply curve more nearly reflect the supply curve of a competitive industry.

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Definitions:

Garlic Salt

A seasoning made from a blend of dried, ground garlic and table salt, often with an anti-caking agent to prevent clumping.

Substitutes

Goods or services that can be used in place of one another. When the price of one rises, the demand for its substitute is likely to increase.

Elastic

Describes a situation in which the supply or demand for a good or service is highly responsive to changes in price.

Long Run

A period in economic analysis where all factors of production and costs are variable, allowing for full adjustment to changes in the market or economy.