In the Presence of an External Benefit, a Pigouvian ______

question 190

Multiple Choice

In the presence of an external benefit, a Pigouvian ______ that is set equal to the ______ the market output to its efficient level.

• A) subsidy; external benefit can increase
• B) tax; external benefit can increase
• C) subsidy; private cost can increase
• D) subsidy; external benefit can decrease

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Definitions:

Society's Viewpoint

Represents the collective opinions and social perspectives held by a community or the public on various issues.

Monopoly

A market structure characterized by a single seller controlling a large portion of the market and the ability to influence prices and output.

Monopolistically Competitive

Refers to a market structure where many companies sell similar but not identical products, allowing them to have some control over their prices.

Economic Profits

Profits that exceed the opportunity costs of a firm, calculated as total revenues minus both explicit and implicit costs.