An External Cost Would Cause _______ Production of the Good

question 187

Multiple Choice

An external cost would cause _______ production of the good and may require a _______ to internalize the externality into the market.

• A) too much; tax
• B) too much; subsidy
• C) too little; tax
• D) too little; subsidy

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Definitions:

Regression Coefficient

A quantitative measure in statistics that represents the strength and direction of the relationship between a dependent variable and an independent variable in a regression analysis.

Single Factor Model

A model that explains the returns of an asset or portfolio using a single risk factor.

SMB Beta

A measure used in finance to assess the sensitivity of a stock's return relative to the size factor in an asset pricing model.

Factor Portfolio

A portfolio that is constructed to have a high sensitivity to certain economic or financial factors, aiming to capture specific risk premiums.