Asked by Johnathan Wagner on Jun 11, 2024
Verified
Governments often ________ activities that generate external ________.
A) tax; benefits
B) subsidize; benefits
C) subsidize; costs
D) simultaneously tax and subsidize; costs
External Costs
Costs that are not reflected in the market price of goods or services, often burdening third parties not involved in the transaction.
External Benefits
Positive effects of a production or consumption activity on third parties not directly involved in the transaction.
- Analyze how government interventions, such as taxes and subsidies, can address externalities.
Verified Answer
NH
Nehal HarsheJun 17, 2024
Final Answer :
B
Explanation :
Governments often subsidize activities that generate external benefits to encourage more of those activities, as the benefits are enjoyed by society at large, not just the individuals or companies undertaking the activities.
Learning Objectives
- Analyze how government interventions, such as taxes and subsidies, can address externalities.
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