Question

3. Should government intervene with tax or subsidy in the presence of externality? Why or why...

3. Should government intervene with tax or subsidy in the presence of externality? Why or why not?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The major problem is regarding the negative externality

The govt intervention will help to correct the failure of market from negative externalities

The government do this by means of regulations

They also does this by the way of taxes and subsidies

Negative externalities also means social cost

The use of tax increase the private cost of consuption/production

Another approach is to subsidise activities that lead to positive externalities

It fairly reduces the cost of production for suppliers

A higher level of training will improve the Improves labour productivity so its good to include subsidy in that cases

HOPE THIS HELPS

PLEASE COMMENT OF YOU HAVE ANY DOUBTS

THANKS

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Discuss the merits of a proposal that the government should impose a tax on or subsidy...
Discuss the merits of a proposal that the government should impose a tax on or subsidy where non-renewable energy resources is supplied monopolistically in order to increase the social welfare
A per-unit subsidy can correct a positive externality Consumption of a good creates a positive externality....
A per-unit subsidy can correct a positive externality Consumption of a good creates a positive externality. Marginal costs are 0.5q + 60, marginal benefits are 110 – 1.5q and marginal social benefits are 110 – 0.5q. Provide a diagram showing the cooperative solution and the private solution. Illustrate and quantify how a per-unit subsidy can be used to correct this externality. Shade in the area representing the total cost to the government providing this subsidy. The subsidy required to correct...
List three examples of when the government should not intervene the free market. Explain why you...
List three examples of when the government should not intervene the free market. Explain why you think they should not.
Determine whether the following government intervention would used to correct a negative or positive externality. a....
Determine whether the following government intervention would used to correct a negative or positive externality. a. A subsidy to consumers b. A pigovian tax on sellers c. Direct controls or limits on the market. d. A subsidy to producers e. Direct provision or offering of the product.
Should the government intervene when the market/government fails? What are some ways that you think the...
Should the government intervene when the market/government fails? What are some ways that you think the government intervenes to correct market/government failures?
The government intends to give a $5 per subsidy tax on milk sales (given to producers)...
The government intends to give a $5 per subsidy tax on milk sales (given to producers) -Determine how consumers and producers share this $5 subsidy. -Determine subsidy cost to government.
If the production of a good results in a positive externality, the government might be able...
If the production of a good results in a positive externality, the government might be able to improve economic efficiency in this market by eliminating private production of the good imposing a tax on private producers promoting the export of the surplus output initiating antitrust action granting a subsidy to private producers
5. A subsidy is the opposite of a tax with a tax of $ 0.50 to...
5. A subsidy is the opposite of a tax with a tax of $ 0.50 to the buyers of cups of coffee, the government collects $ 0.50 for each cup of coffee purchased; with a subsidy $ 0.50 to coffee sellers, the government pays sellers $ 0.50 to sellers for every cup of coffee sold. Show the effect of a subsidy of $ 0.50 per cup on the cup offer curve of coffee, the effective price paid by consumers, the...
Why is there a Deadweight Loss if the government provides a subsidy to the producers?
Why is there a Deadweight Loss if the government provides a subsidy to the producers?
In which of the following situations can an externality be internalized by using the Pigouvian​ subsidy?...
In which of the following situations can an externality be internalized by using the Pigouvian​ subsidy? ​(Check all that​ apply.) A. John likes to play loud music in the middle of the night which disturbs his​ roommate's sleep. B. An orchard is placed next to a beehive.​ So, both the farmer and the beekeeper benefit from each other. C. The pollution caused by a firm has adverse health consequences for nearby residences. D. ​Sophia's flower garden provides a pleasant view...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT