Which of the Following Is a Cost of Internalizing a Negative

question 9

Multiple Choice

Which of the following is a cost of internalizing a negative externality?

• A) Less output is produced.
• B) The deadweight loss is larger.
• C) The level of pollution rises.
• D) Taxes must increase to cover the external cost.
• E) The government must pay firms to encourage them to change production techniques.

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Definitions:

Magnification

A cognitive distortion involving an exaggeration of the importance or size of an event or thought.

Behavioral

Relating to the actions or reactions of a person or animal in response to external or internal stimuli.

John Watson

An influential figure in the field of psychology, known for his work in developing the theory of behaviorism.

Psychodynamic

Psychodynamic refers to a psychological perspective that analyzes how human behavior springs from unconscious drives and conflicts.