externalilties MC

Negative externalities in a market could be internalized if
a) there were a tax on the product
b) there were a subsidy on the product
c) production were stopped
d) the Coase Theorem failed

which is the correct answer? what does it mean by internalized?

In this case, internalized means that the social costs of the externality are some-how "captured" or accounted for in the final price and quantity.

I would go with a). A tax per unit on the producer that is equal to the per-unit externality cost would have the effect of internalizing the externality.

BTW, economists refer to such a tax as a Pigouvian tax (after the British Arthur Pigou)

  1. 👍
  2. 👎
  3. 👁

Respond to this Question

First Name

Your Response

Similar Questions

  1. Economics

    The price received by sellers in a market will decrease if the government Answer A. imposes a binding price floor in that market. B. decreases a binding price ceiling in that market. C. decreases a tax on the good sold in that

  2. economy

    consider a perfectly competitive market in which all firms have the same costs. choose the statement that is incorrect a)the market demand is elastic at the market price b)each firm takes the market price as given and produces its

  3. Economics

    Buyers will opt out of markets in which: A. there are significant negative externalities. B. standardized products are being produced. C. there is inadequate information about sellers and their products. D. there are only foreign

  4. mathematics

    I need this now In Pennsylvania, state sales tax is used to pay for services provided by the state. The sales tax rates vary by city and county. In Warren County the sales tax rate is 6%; in Allegheny County, the sales tax rate is

  1. Economics

    What is a potential negative outcome when the government seeks to ensure specific market outcomes? decrease in business tax incentives regulations that slow down innovations unpleasant information shared by businesses lack of

  2. Social Studies re-post

    1.In a traditional economy, how are economic decisions made? consumers and planners custom and habit**** combination of consumers and planners government leaders 2.In a command economy, how are economic decisions made? government

  3. Microeconomics

    This is a 5 part question; (a-e)The question reads: Suppose that a market is described by the following supply & demand equations: Qs=2P & Qd=300-P a) Solve for the equalibrium price & quantity. (I think I understand this

  4. MicroEconomics

    80. Firms in an industry that informally agree to charge the same price as the largest firm are an example of ______. (Points: 3) satisfying price extortion overt collusion ****tacit collusion 81. A dominant strategy equilibrium

  1. Economics

    A tax imposed on a market with an inelastic demand and an elastic supply with cause: A)sellers to pay the majority of the tax B)buyers to pay the majority of the tax C)the tax burden to be equally devided between buyers and

  2. economics

    if you could verify/falsify my answers on these multiple choice questions and possible give me insight on possible correct answers, that would be great. thanks! 1. Which is an acceptable market method of regulating negative

  3. economics

    The following information applies to the market for a particular items in the absence of a unit excise tax: Price($ per unit) Quantity Supplied Quantity Demanded 4 50 200 5 75 175 6 100 150 7 125 125 8 150 100 9 175 75 According

  4. Economics

    Suppose that the equilibrium quantity in the market for widgets has been 200 per month. Then a tax of $5 per widget is imposed on widgets. The price paid by buyers increases by $2 and the after-tax price received by sellers falls

You can view more similar questions or ask a new question.