If the Production of a Product or Service Involves External

question 108

Multiple Choice

If the production of a product or service involves external or spillover benefits,then the government can improve efficiency in the market by:

• A) providing a subsidy to correct for an overallocation of resources.
• B) providing a subsidy to correct for an underallocation of resources.
• C) imposing a corrective tax to correct for an overallocation of resources.
• D) imposing a corrective tax to correct for an underallocation of resources.

---

Definitions:

Thermoreceptor

Sensory receptor that detects heat.

Mechanoreceptor

Sensory receptor that responds to mechanical stimuli, such as pressure, sound waves, or gravity.

Photoreceptor

Sensory receptor that responds to light stimuli.

Proprioceptor

Class of mechanoreceptor responsible for maintaining the body’s equilibrium and posture; involved in reflex actions.