Which of the following statements is TRUE?I. A Pigouvian subsidy reduces the market price to encourage consumption and correct for the underproduction of a good.II. A Pigouvian tax increases the market price to discourage consumption and correct for the overproduction of a good.III. Negative externalities create deadweight losses, but positive externalities do not. I, II, and III I only III only I and II only
Which of the following statements is TRUE?I. A Pigouvian subsidy reduces the market price to encourage consumption and correct for the underproduction of a good.II. A Pigouvian tax increases the market price to discourage consumption and correct for the overproduction of a good.III. Negative externalities create deadweight losses, but positive externalities do not. I, II, and III I only III only I and II only
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 8QP
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Which of the following statements is TRUE? I. A Pigouvian subsidy reduces the market price to encourage consumption and correct for the underproduction of a good. II. A Pigouvian tax increases the market price to discourage consumption and correct for the overproduction of a good. III. Negative externalities create |
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