If the Production of a Good Creates Large Spillover Benefits

question 208

Multiple Choice

If the production of a good creates large spillover benefits on others, the government might correct for the:

• A)​overallocation of resources to its production by subsidizing it.
• B)​overallocation of resources to its production by imposing a tax on it.
• C)​underallocation of resources to its production by subsidizing it.
• D)​underallocation of resources to its production by imposing a tax on it.

---

Definitions:

Lung Ventilation Scan

A diagnostic imaging test that measures airflow and blood flow in the lungs, often using radioactive materials to view the organ's function.

Inhalation

Inhalation is the process of breathing in air or other gases, including the intake of substances such as medications delivered via the respiratory tract.

Radioactive Gas

A type of gas that emits radiation as a result of the decay of radioactive elements; radon is a well-known example of such a gas.

Chronic Pulmonary Histoplasmosis

A long-term lung infection caused by the fungus Histoplasma capsulatum, which can result in respiratory symptoms and requires medical treatment.