When the Government Chooses an Externality Policy That Aligns Private

question 193

Multiple Choice

When the government chooses an externality policy that aligns private incentives with social efficiency to solve an externality,what does it do

• A)It provides incentives for private decision makers to solve the externality problem on their own.
• B)It typically uses command-and-control techniques.
• C)It follows a rule that the use of taxes is strictly forbidden.
• D)It follows a rule that subsidies are always the best policy.

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Definitions:

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A legal document that grants another person the authority to make decisions on behalf of the grantor, particularly in matters of finance and healthcare, and remains in effect even if the grantor becomes incapacitated.

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Constructive Trust

A legal remedy imposed by a court to prevent unjust enrichment by transferring property from the holder to the rightful beneficiary.

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