Question

Suppose you have discovered that allowing a new business to locate in Econland will create considerable pollution and many citizens will be ashamed of being associated with this firm. Because of this fact alone you should ___________ the costs that this business faces which will result in __________ output being produced and that output will be sold at a __________ price than it would without government intervention.

Subsidize, more,,lower

Tax, more, higher

Tax, less, lower

Subsidize, less higher

Tax, more lower

Tax, less, higher

Answer 1

Because of this fact alone, you should TAX the costs that this business faces which will result in LESS output being produced and that output will be sold at a HIGHER price than it would without government intervention.