Altering Incentives So That People Take Account of the External

question 116

Multiple Choice

Altering incentives so that people take account of the external effects of their actions

• A) is called internalizing the externality.
• B) can be done by imposing a corrective tax.
• C) is the role of government in markets with externalities.
• D) all of the above.

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Definitions:

Autonomy

The degree of freedom and independence an individual or entity has to make choices and decisions without external control.

High Power Distance

A cultural dimension where there is a large gap between those in power and the common people, with a significant level of acceptance of the uneven distribution of power in institutions and organizations.

Authority

The recognized power or right of an individual or entity to make decisions, give orders, and enforce obedience.

Directives

Instructions or orders given by someone in authority, intended to guide or dictate the actions of others.