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If a Positive Externality Is to Be Taken Full Advantage

Question 42

Multiple Choice

If a positive externality is to be taken full advantage of, the:


A) consumer of the good should receive a subsidy equal to the marginal cost imposed on third parties that results from production (or consumption) of the good.
B) producers' marginal costs should be increased by an amount equal to the marginal benefit to third parties that results from production of the good.
C) consumer of the good should pay a tax equal to the marginal benefit to third parties that results from production (or consumption) of the good.
D) producers' marginal costs should be decreased by an amount equal to the marginal cost imposed on third parties that results from production of the good.

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