Question

All of these are used when positive externalities exist, EXCEPT:

Question 93 options:

	a) coupons.
	b) vouchers.
	c) taxes.
	d) subsidies.

Which of these is a policy idea that the government could use to correct a negative externality?

Question 92 options:

	a) encouraging the over-allocation of resources of production that create negative externalities
	b) providing government subsidies to producers of goods that create negative externalities
	c) imposing a fee on waste from the production of goods that create negative externalities
	d) providing financing of the additional production of goods that create negative externalities

Reductions in federally subsidized student loans will:

Question 79 options:

	a) increase the demand for human capital.
	b) increase the supply of human capital.
	c) decrease the supply of human capital.
	d) decrease the demand for human capital.

If, at the same time that the demand for human capital decreases, there is also an increase in the supply of funds for human capital investment, interest rates and the cost of investment _____, and the investment in human capital _____.

Question 78 options:

	a) decrease; increases
	b) decrease; decreases
	c) may rise, fall, or stay the same; increases
	d) decrease; may rise, fall, or stay the same

Answer 1

Question 93

Externality refers to the situation in which action taken by the party incurs cost or being benefit to unrelated third parties.

Externality can be positive or negative.

Positive externality arises when a person benefits from an act of any other person without compensating such other person.

A good generating positive externality is generally under produced as producer is not able to charge the unrelated thrid parties for the benefit they get.

In such scenario, government generally subsidize the production of such good to increase production or use coupons or vouchers to internalize the marginal external benefit so that socially optimal amount of good can be produced.

Taxes are generally used to correct negative externality.

Thus,

All of these are used when positive externalities exist, Except taxes.

Hence, the correct answer is the option (C).

Note - As per Chegg Answering Policy, Ist question with elaborate explanation has been answered.