Question

1.) A tax on a good with a negative externality a. will create a shortage of...

1.) A tax on a good with a negative externality

a. will create a shortage of that good.

b. cannot raise revenue for the government.

c. will always cause deadweight loss.

d. can increase economic efficiency.

2.)

The study of how the allocation of resources affects economic well-being is called

a. home economics.

b. financial economics.

c. welfare economics.

d. efficiency economics.

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Answer #1

Q1
Answer
d. can increase economic efficiency.
The negative externality provides the cost to the society so that taxing it and using the tax to clear it provides economic efficiency
ex.
taxing pollution producing product decreases pollution and the tax revenue is used to provide benefits to those who are affected by the pollution

Q2
Answer
c. welfare economics.
The study of how the allocation of resources affects economic well-being is called welfare economics.
The welfare economics studies allocation of resources which increase the well being of society

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