The Government Can _______________ Change an Inefficient Market Outcome (In

question 81

Multiple Choice

The government can _______________ change an inefficient market outcome (in the case where there is a negative externality) into an efficient outcome by imposing a tax on the activity that generates the negative externality.

• A) in almost all situations
• B) possibly
• C) not
• D) in all situations
• E) a or d

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Definitions:

Profits Maximize

The process of adjusting production and operations to achieve the highest possible profit margins.

Restaurant Industry

A sector of the economy that is concerned with the preparation, sale, and service of food and beverages to customers.

Quantity

The amount or number of a material or immaterial good considered as a unit or units.

Economic Profits

Profits after subtracting both explicit and implicit costs from total revenue, representing earnings that exceed the opportunity cost of all resources.