In the Case of a Technology Spillover, the Government Can

question 54

Multiple Choice

In the case of a technology spillover, the government can encourage firms to internalize a positive externality by

• A)taxing production, which would decrease supply.
• B)taxing production, which would increase supply.
• C)subsidizing production, which would decrease supply.
• D)subsidizing production, which would increase supply.

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Definitions:

Variable Cost

A cost that varies with the level of output, including expenses such as materials and labor directly tied to the production volume.

Units Sold

The cumulative amount of a product sold over a designated time frame.

Period Costs

Expenses that are not directly tied to production and are accounted for in the period in which they are incurred, such as selling and administrative expenses.

September

The month that appears as the ninth in the sequence of months in the Gregorian calendar.