In a Market with an External Cost,government Action

question 78

Multiple Choice

In a market with an external cost,government action

• A) cannot decrease the amount of the deadweight loss from the external cost.
• B) can sometimes help to achieve an efficient outcome.
• C) cannot alter firms' cost curves.
• D) Both answers A and C are correct.
• E) Both answers B and C are correct.

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Definitions:

Redeemed

The act of repaying or buying back a security or loan, often before it matures.

Guaranteed Minimum

The lowest amount assured by a contract, regardless of external conditions or outcomes.

Annual Rates

Refers to the interest rate or growth rate over a one-year period, often used in financial contexts.

Strip Bond

A financial instrument resulting from the separation of the coupon payments and the principal of a regular bond, where each part is sold separately as a zero-coupon bond.