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Author Question: Which of the following policies addresses the problem posed by positive externalities? A) a ... (Read 34 times)

ghost!

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on: Jul 1, 2018
Which of the following policies addresses the problem posed by positive externalities?
 
  A) a subsidy to the agent that generates the positive externality
  B) a tax on the agent that generates the positive externality
  C) limit the activity that generates the positive externality
  D) a subsidy to the agents that benefit from the positive externality

Question 2

In the presence of a negative externality, a specific tax can achieve the social optimum because
 
  A) output is reduced to zero as a result.
  B) it internalizes the external cost.
  C) it directly charges the producer for polluting.
  D) the price of the good rises by the full amount of the tax.
Microeconomics ¦ Perloff ¦ 8th Edition
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shayla

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Reply #1 on: Jul 1, 2018
Answer to Question 1

A

Answer to Question 2

B


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