(Solved): When the production of a good generates a negative externality: A) the government could increase e ...

When the production of a good generates a negative externality: A) the government could increase economic efficiency by subsiding the good producing of the negative externality. B) the government could increase economic efficiency by reducing regulations on the production of the good. C) the government could increase economic efficiency by taxing the good producing of the negative externality. D) government will maximize economic efficiency by leaving the market alone. The government in this situation should always pursue Laissez Faire. Whenever a negative externality exists in the production of a good: A) we expect that the firms will produce too much of the good at too low a price compared to the economically efficient amounts. B) we expect that the firms will produce too little of the good at too low a price compared to the economically efficient amounts. C) we expect that the firms will produce too little of the good at too high a price compared to the economically efficient amounts. D) we expect that the firms will produce too much of the good at too high a price compared to the economically efficient amounts. An example of a positive externality is a situation where: A) a factory hires an engineering firm to help it reduce its fuel consumption in order to save money. In the process the engineering firm earns higher profits. B) engineers working for Tide detergent invent a new cleaner. Tide's customers get much better looking clothes that don't need to be replaced as often. C) a power plant produces electricity for its customers who get a benefit from having lights in their houses. D) a factory hires an engineering firm to help it reduce its fuel consumption in order to save money. In the process the neighbors get cleaner air.