Suppose That Smoking Creates a Negative Externality

question 229

Multiple Choice

Suppose that smoking creates a negative externality.What can the government do to equate the equilibrium quantity of cigarettes and the socially optimal quantity of cigarettes smoked?

• A)impose a tax on cigarettes that is equal to the per-unit externality
• B)offer a subsidy on cigarettes that is equal to the per-unit externality
• C)impose a regulation limiting the number of cigarettes that each consumer can purchase
• D)nothing

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Definitions:

Unanimous Consent

Agreement by all parties or members involved, often used to expedite procedural or formal requirements without formal vote.

Partners

Individuals or entities that share ownership and responsibilities in a business or venture.

Regulatory Control

The oversight and enforcement of rules and regulations by a governing body to ensure adherence to lawful standards and protect public interests.

Sole Proprietor

The single owner of an unincorporated business, personally responsible for all debts and obligations of the business.