Homework SourseThe federal government regulates how much carbon dioxide a f
The federal government regulates how much carbon dioxide a factory can emit. This statement best represents this economic concept:
| Resources are scarce. | |
| Markets usually lead to efficiency. | |
| When markets don\'t achieve efficiency, government intervention can improve society\'s welfare. | |
| “How much” is a decision at the margin. |
Solution
When the federal government regulates how much carbon dioxide a factory can emit. This statement best represents this economic concept When markets don\'t achieve efficiency, government intervention can improve society\'s welfare.
This is because when market activity creates negative externality without government intervention, then for achieving efficiency and improving people welfare, the government intervention is required. The government intervenes by imposing the taxes on the firms which creates negative externalities.
Hence option third is the correct answer.
Option third; When markets don\'t achieve efficiency, government intervention can improve society\'s welfare.
