Governments Can Increase the Consumption of a Product That Creates

question 248

Multiple Choice

Governments can increase the consumption of a product that creates positive externalities by

• A)subsidizing the production of the product so that the supply is increased and market price is reduced.
• B)taxing the production and consumption of the product.
• C)convincing everyone to consume the product.
• D)assigning property rights to the producers of the product.

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Definitions:

Total Cost

The total of all costs associated with producing goods or services, which encompasses both fixed and variable expenses.

Marginal Revenue

The increase in earnings resulting from the sale of one extra unit of a good or service.

Marginal Cost

The amount needed to make one more unit of a certain product or service.

Total Economic Costs

The sum of all expenses a firm faces, including both explicit costs (direct payments) and implicit costs (opportunity costs).