If There Are Both External Benefits and External Costs Associated

question 46

Multiple Choice

If there are both external benefits and external costs associated with the production and consumption of a good, and the external benefits are greater than the external costs,

• A)​Taxing it could bring us closer to the efficient solution
• B)​Subsidizing it could bring us closer to the efficient solution
• C)​Neither a tax or a subsidy could bring us closer to the efficient solution
• D)​None of the above is true.

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Definitions:

Biological Community

A group of interacting organisms of different species living in a common location and sharing resources.

Ecological Niche

The role and position a species has in its environment; how it meets its needs for food and shelter, how it survives, and how it reproduces.

Local Environment

The specific surroundings or conditions in which a person, plant, or animal lives or operates.

Restriction

The limitation or control of someone or something, or the action of such limitation.