When the Production of One Good Spills Benefits Over to Third

question 64

Multiple Choice

When the production of one good spills benefits over to third parties, the government should consider all of the following EXCEPT

• A) subsidizing the consumption of the good.
• B) subsidizing the production of the good.
• C) creating tax incentives to encourage more consumption.
• D) taxing the production or consumption of the good.

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Definitions:

Gross Earnings

The total amount of revenue or income earned by an individual or business before any deductions or taxes are applied.

Net Pay

The amount of money an employee takes home after deductions like taxes and retirement contributions have been subtracted.

FICA Tax

A mandatory tax used to fund the United States Social Security and Medicare programs, deducted from the wages of employees.

Federal Income Tax

A tax levied by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.