The Theory That Guided European Governments in Managing Their Colonies

question 3

Multiple Choice

The theory that guided European governments in managing their colonies in the New World was that of

• A)Mercantilism.
• B)Puritanism.
• C)The Divine Right of Kings.
• D)Capitalism.
• E)Socialism.

---

Definitions:

Pigouvian Tax

A tax imposed on any market activity that generates negative externalities (costs not reflected in the market price) with the aim of correcting the market outcome.

Cost Function

A mathematical relation that describes how production costs change with variations in the level of output.

Competitive Price

A pricing strategy that aims to attract customers by setting product prices similar or lower than rivals in the market.

Tragedy Of The Commons

A situation in which individuals, acting independently and rationally according to their own self-interest, behave contrary to the best interests of the whole by depleting or spoiling shared resources.