How Might a Government Intervene in a Market to Prevent

question 114

Multiple Choice

How might a government intervene in a market to prevent the overuse of a common-property resource,such as an ocean fishery?

• A)subsidies to the consumers of fish
• B)reducing the marginal social cost such that marginal social cost equals marginal social benefit,thereby establishing allocative efficiency
• C)subsidies to the firms catching the fish
• D)a system of licences and quotas for fishers
• E)encouraging the use of larger,more efficient trawlers to reduce the marginal private cost to fishers

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Definitions:

Purchase Discounts

Reductions in the price of goods purchased, usually as a reward for early payment to the supplier.

Freight-In

The cost associated with getting inventory to a business, usually included in the cost of goods sold.

GAAP

The collection of standard accounting practices widely recognized for financial reporting is called Generally Accepted Accounting Principles.

Perpetual System

A system for managing inventory accounts that instantly logs inventory sales or acquisitions using computerized point-of-sale systems and software for enterprise asset management.