If the Government Imposes an Effective ________,Output Decreases and ________

question 229

Multiple Choice

If the government imposes an effective ________,output decreases and ________ increases.

• A) price support; consumer surplus
• B) price floor; consumer surplus
• C) price support; total revenue
• D) price floor; marginal benefit to consumers
• E) price ceiling; efficiency

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Definitions:

Negative Externalities

Costs suffered by a third party as a result of an economic transaction which the parties directly involved in the transaction do not fully account for.

Public Good

A product that one individual can consume without reducing its availability to another individual and from which no one is excluded.

Marginal Benefit

The incremental utility or satisfaction derived from the consumption or production of an additional good or service unit.

Marginal Cost

The increment in comprehensive expenses related to the generation of an extra unit of a good or service.