Post Utme Rhema University 2023 Economics Question 6

Practice objective / multiple choice question 6 from the 2023 Post Utme Rhema University Economics examination.

Post Utme Rhema University 2023 Economics Objective / Multiple Choice
Question 6 POST_UTME_RHEMA_UNIVERSITY • 2023 • ECONOMICS • objective

A firm operating in a perfectly competitive market produces two goods, A and B. The production of good A generates a positive externality for the production of good B. U\sing the concept of opportunity \cost, explain why the firm's production of good A will increase if the government imposes a tax on the production of good B.

Answer Options

A. The firm will increase production of good A to compensate for the decrease in the production of good B.
B. The firm will decrease production of good A to avoid the tax on good B.
Correct Answer C. The firm will increase production of good A to take advantage of the positive externality.
D. The firm will decrease production of good A to reduce the opportunity \cost of producing good B.
Correct Answer
C
Correct Option:
The firm will increase production of good A to take advantage of the positive externality.

About This Question

This is Post Utme Rhema University 2023 Economics Question 6. It is one of the objective questions from the 2023 Post Utme Rhema University Economics examination.

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