To test their theories, economists usually have to
A) set up careful laboratory experiments with all variables controlled.
B) first examine theory and what has happened in the past in the real world.
C) use only models that have a proven record of success.
D) anticipate every factor with 100 percent accuracy.
Question 2
Which of the following might be a method that the government could use to correct a negative externality?
A) an effluent fee on waste from the production of goods that create negative externalities
B) government subsidies to producers of goods that create negative externalities
C) financing additional production of goods that create negative externalities
D) encouraging overallocation of resources of production of goods that create negative externalities
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