Which of the following policies address the 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
The producer surplus to a monopolist must be
A) less than zero or the firm is in violation of anti-trust statutes.
B) at least as great as the producer surplus in a competitive market.
C) positive, otherwise why would the monopoly produce?
D) the same as for a competitive market.
