Pigouvian Subsidization

question 17

Multiple Choice

Pigouvian subsidization

• A) Involves the use of taxes or fees to remedy negative externalities
• B) Involves the use of subsidies to remedy negative externalities
• C) Is a legal principles requiring a party who takes an action that harms others to compensate the affected parties for some or all of their losses
• D) Requires that victims of an externality pay a tax to the producers of the externality

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Definitions:

Diminishing Returns

A principle stating that if one factor of production is increased while others are held constant, the additional output will eventually decrease.

Biodegradable Plastic

A type of plastic that decomposes naturally by the action of living organisms, such as bacteria, making it environmentally friendly.

Agricultural Produce

Products that are grown and harvested from farming activities, including crops, fruits, vegetables, and livestock products.

Yield to Maturity

The total expected return on a bond if it is held until the date it matures, accounting for its current market price, par value, coupon interest rate, and time to maturity.