Multiple Choice
Which of the following statements is true regarding self-funded or self-insured health plans as a public solution to externalities in healthcare?
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7. Externalities
Public Solutions to Externalities
Multiple Choice
Contemporary governments promote business development by:
A
eliminating all forms of public infrastructure
B
imposing higher tariffs on domestic goods
C
providing subsidies or tax incentives to firms
D
restricting access to credit for new businesses
Verified step by step guidance1
Step 1: Understand the role of government in business development. Governments typically aim to create an environment that encourages firms to grow and innovate.
Step 2: Analyze each option given in the problem. Eliminating public infrastructure would likely harm businesses because infrastructure supports production and distribution.
Step 3: Consider the impact of imposing higher tariffs on domestic goods. Higher tariffs usually protect domestic industries but can also increase costs and reduce competitiveness.
Step 4: Recognize that providing subsidies or tax incentives reduces costs for firms, encouraging investment and expansion, which aligns with promoting business development.
Step 5: Note that restricting access to credit for new businesses would limit their ability to start or grow, which contradicts the goal of promoting business development.
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