One Way to Solve Negative Externality Problems Is

question 32

Multiple Choice

One way to solve negative externality problems is

• A)to organize a limited boycott of the products.
• B)subsidize the externalities.
• C)eliminate transactions costs when property rights are not legally established.
• D)issue pollution permits to polluting firms and establish a system of cap-and-trade.
• E)establish and enforce patents and copyrights.

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Definitions:

Maximum Output Level

refers to the highest amount of production a company can achieve with the current resources and technology.

Production Possibilities Frontier

A curve representing a hypothetical model of a two-product economy operating at full employment.

Aggregate Demand Curve

A curve that represents the total demand for goods and services within an economy at various price levels, all else being equal.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often used to measure inflation.