When Producers Operate in a Market Characterized by Negative Externalities

question 307

Multiple Choice

When producers operate in a market characterized by negative externalities, a tax that forces them to internalize the externality will

• A)give sellers the incentive to account for the external effects of their actions.
• B)increase demand.
• C)increase the amount of the commodity exchanged in market equilibrium.
• D)restrict the producers' ability to take the costs of the externality into account when deciding how much to supply.

---

Definitions:

Usual Pattern

The common or typical way in which something normally occurs or is experienced.

Branches Of Psychology

Various specialized fields within psychology that focus on different aspects of human thought, behavior, and emotions, such as clinical, cognitive, developmental, and social psychology.

Personality Psychology

a branch of psychology that studies personality and individual differences, focusing on the construction of a coherent picture of the individual and their major psychological processes.

Observers

In psychological research, individuals who watch, record, and analyze the behavior of subjects in a study without interacting with them directly.