If one day it was discovered that lime juice caused cancer, which of the following would likely result?
A) The supply curve for lime juice would shift to the right.
B) The supply curve for lime juice would shift to the left.
C) The demand curve for lime juice would shift to the right.
D) The demand curve for lime juice would shift to the left.
Question 2
The government might provide a subsidy when
A) a negative externality exists.
B) an effluent fee has been unsuccessful.
C) it wants to increase the amount of a good consumed.
D) it wants to transform a negative externality into a positive externality.
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