A System for a Government to Intervene in a Market

question 39

Multiple Choice

A system for a government to intervene in a market with externalities in order to reduce their effects by levying charges on the agents causing the externality in order to force them to reduce the externality to the acceptable level is called

• A) Pigouvian taxes
• B) standards and charges
• C) the Coase theorem

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Definitions:

Readily Available

Something that is easily obtainable or accessible whenever needed.

Payback Period

The duration of time it takes to recoup the cost of an investment.

Discounted Payback

A capital budgeting method that calculates the time required to break even from an investment based on its discounted cash flows rather than just the nominal cash flows.

Liquid Investments

Assets that can be quickly and easily converted into cash without significant loss in value, like stocks and bonds.