If in an Attempt to Correct an Externality the Government

question 57

Multiple Choice

If in an attempt to correct an externality the government sets a Pigouvian subsidy too high the equilibrium quantity will be:

• A) higher than the efficient quantity.
• B) lower than the efficient quantity.
• C) equal to the efficient quantity.
• D) zero.

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Definitions:

Tax-exempt

Refers to income, transactions, or entities that are not subject to tax by government authorities.

Weighted Average

A mean calculated by giving values in a data set more influence according to some attribute of the data, such as frequency or importance.

Daily Receipts

The total amount of cash collected by a business within a single day.

Delay

The act of postponing or deferring an action or event, often resulting in the respective activity being carried out later than originally planned.