Which of the Following Policies Addresses the Problem Posed by Positive

question 67

Multiple Choice

Which of the following policies addresses the problem posed by positive externalities?

• A) a subsidy to the agent that generates the positive externality
• B) a tax on the agent that generates the positive externality
• C) limit the activity that generates the positive externality
• D) a subsidy to the agents that benefit from the positive externality

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Definitions:

Efficient Tax System

A tax framework that maximizes revenue without discouraging economic activity or putting undue burden on taxpayers, ensuring fairness, compliance, and minimal distortion in economic decisions.

Revenue Collection

Revenue collection is the process by which governments or organizations collect money, often in the form of taxes, duties, or fees, from individuals or businesses.

Emotional Stability

A personality trait that denotes the ability to remain calm and balanced, even in stressful or challenging situations.

Quarterly Targets

Objectives set by a business or organization to be achieved within a three-month period.