?

AP® Microeconomics

Free Version

Upgrade subject to access all content

Difficult

Market Failures: Remedies for Specific Market Failures

APMICR-NPVP1C

Which of the following describes an appropriate remedy for a specific market failure?

A

The government imposes a per-unit excise tax on the production of electricity because the electric power company operates as a monopoly.

B

The government provides a per-unit subsidy for production of tobacco because tobacco creates negative externalities.

C

The government provides a lump-sum subsidy to a natural gas company because it operates as a monopoly.

D

The government provides free whooping cough vaccines because these vaccines creates positive externalities.

E

The government imposes a price ceiling in the market for flowers because flowers create positive externalities.