Use the Following to Answer Questions

question 20

Multiple Choice

Use the following to answer questions :
Figure: City with Two Polluters
-Suppose that the production of roses generates a positive externality in that travellers enjoy the scenic beauty of the garden.An appropriate government policy yielding the efficient outcome would be a:

• A) Pigouvian tax.
• B) Pigouvian subsidy.
• C) system of rose-production permits.
• D) reduction in transaction costs.

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Definitions:

Cash Dividends

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.

New Capital

Financial resources that are raised by a business through issuing new stocks or bonds to invest in its operations and growth.

Cash Dividends

Payments made by a corporation to its shareholder members, distributing a portion of its earnings in cash.

Patent

A legal right granted to an inventor, giving them exclusive rights to produce, use, and sell their invention for a certain period of time.