Economist A

question 181

Essay

Economist A.C.Pigou argued that to deal with a negative externality in production, the government should impose a tax equal to the cost of the externality.What did Pigou believe should be done in the case of a positive externality in consumption? How would his recommendation impact the demand and market equilibrium for the product which is generating the positive externality?

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Definitions:

Erroneous Generalization

A logical fallacy that occurs when a conclusion is drawn from an unrepresentative sample or insufficient evidence.

Corporate Thieves

Individuals or entities who steal or embezzle assets or resources from a corporation.

Splendid Economic Recovery

Describes a period of rapid and substantial economic improvement following a downturn or recession.

Fallacy

An error in reasoning that renders an argument invalid or unsound, often misleading in nature.