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.

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Definitions:

Accumulated

The total gathered or collected amount over a period of time, referring to various contexts such as finances, data, or materials.

Invested at

Refers to the specific time or price point at which investments are made into a financial instrument or asset.

Accounting Rate of Return

A financial metric used to assess the profitability of an investment, calculated as the average annual profit divided by the initial investment cost.

Incremental Revenue

Additional income generated from a new action or decision, beyond what would have been achieved without it.