In the Case of a Negative Externality,the Government Can Use

question 30

Multiple Choice

In the case of a negative externality,the government can use a ________________ to turn an inefficient outcome into an efficient one.In the case of a positive externality,the government can use a ________________ to turn an inefficient outcome into an efficient one.

• A) tax; subsidy
• B) subsidy; tax
• C) tax; tax
• D) subsidy; subsidy

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Definitions:

Indirect Business Taxes

Taxes levied on goods and services rather than on income or profits, such as sales tax, often passed on to the consumer.

Rent

The payment made by a tenant to a landlord for the use of a property, room, or apartment for a specified period.

Depreciation

Accounting method of allocating the cost of a tangible or physical asset over its useful life, reflecting wear and use over time.

Indirect Business Taxes

Taxes levied on goods and services rather than on income or profits, such as sales tax or value-added tax, ultimately passed on to consumers in the form of higher prices.