As a Result of the Price of Raw Materials Rising

question 17

Multiple Choice

As a result of the price of raw materials rising from $4 to $8 per unit,the aggregate:

• A)supply curve would shift to the left, and potential output would remain constant
• B)supply curve would shift to the right, and potential output would remain constant
• C)supply curve would shift to the left, and potential output would decrease
• D)demand curve would shift to the right
• E)demand curve would shift to the left

---

Definitions:

Positive Externality

A beneficial effect experienced by a third party who did not choose to incur that benefit, often resulting from an individual's or firm's actions.

Corrective Tax

A tax designed to internalize externalities, effectively correcting market outcomes that might otherwise result in social inefficiency.

Command-And-Control Policies

Regulatory strategies where the government sets specific limits and controls on emissions or discharges, often requiring technology or methods to be used.

Corrective Taxes

Taxes imposed to correct the market outcomes by accounting for externalities and bringing the social costs and benefits into balance.