Assume the production of a good gives rise to external benefits. ...

[maychende]

Assume the production of a good gives rise to external benefits. The government may increase efficiency by
 
  A) subsidizing consumption of the good.
  B) requiring all producers of the good to be licensed.
  C) taxing production of the good.
  D) imposing taxes on the good.

Question 2

If a tax system is progressive, then
 
  A) the average and the marginal tax rates are equal.
  B) the marginal tax rate is greater than the average tax rate as income rises.
  C) the marginal tax rate is lower than the average tax rate as income rises.
  D) the average tax rate is constant, but the dollar amount paid in taxes increases as income increases.

[joanwhite]

Answer to Question 1

A

Answer to Question 2

B