Author Question: When cost externalities exist, an optimal equilibrium can be attained if the government A) ... (Read 49 times)

mspears3 · **on:** Jul 1, 2018

When cost externalities exist, an optimal equilibrium can be attained if the government

A) restricts production.
B) levies a tax for the difference between private costs and social costs.
C) prohibits production.
D) All three above
E) Both A and B

Question 2

Investment in safety at the firm level poses a prisoners' dilemma because

A) if each firm plays its dominant strategy, joint profits are maximized.
B) if each firm plays its dominant strategy, joint profits are not maximized.
C) neither firm has a dominant strategy.
D) the Nash equilibrium is not achieved.