To Internalize a Positive Externality

question 105

Multiple Choice

To internalize a positive externality:

• A)​the consumers of a good could receive a subsidy equal to the external benefit resulting from the production or consumption of the good.
• B)​a producer's costs could be increased by an amount equal to the external benefit resulting from the production of the good.
• C)​consumers of the good could pay a tax equal to the external benefit resulting from the production or consumption of the good.
• D)​None of the above are correct.

Identify circumstances under which workers do and do not earn economic rent in different market structures.

Recognize how the introduction of multiple employers affects wages and employment in previously monopsonistic markets.

Determine the profit-maximizing level of labor purchase in monopsony and competitive markets.

Explain the role of unions in affecting wages and employment for union and non-union workers.

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Definitions:

Best Choice

The best choice indicates the most suitable or advantageous option selected from a range of alternatives.

Mental Models

Internal representations of the outside world that individuals use to understand and interact with it.

Production Blocking

A phenomenon in group brainstorming sessions where the flow of ideas is inhibited because only one person can speak at a time.

Satisfice

A decision-making strategy that aims for a satisfactory or adequate outcome, rather than the optimal solution, due to the limitations of the decision-making process.