When There Is No Market for a Negative Externality,the Producer

question 31

Multiple Choice

When there is no market for a negative externality,the producer of the externality _____.

• A)has strong incentive to consider the costs it imposes on others
• B)will try to create a market
• C)will limit production of the good producing the externality
• D)has no incentive to consider the costs it imposes on others

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Definitions:

Income Subsidy

An income subsidy is a government-provided financial assistance program intended to boost an individual's income to a level sufficient for meeting basic living standards.

Negative Income Tax

A program where the government provides additional income to those who earn under a specific threshold, rather than collecting taxes from them.

Tax Liability

Tax liability is the total amount of tax that an individual or organization is legally obligated to pay to a taxing authority based on earnings, property ownership, or other taxable conditions.

Earned Income Tax Credit

A tax credit in the United States designed to benefit individuals and families with low to moderate incomes, effectively reducing the amount of tax owed and possibly resulting in a refund.