7.	An optimal corrective tax _____.
	a. falls as quantity produced increases
	b. is above the marginal external product
	c. is a lump sum tax
	d. helps to increase demand for the taxed product
8.	In theory, a corrective tax _____ the _____ will create the optimal result.
	a. equal to; externality
	b. above; externality
	c. equal to; price
	d. above; price
9.	An optimal corrective tax should be placed on _____.
	a. the sellers of the externality-generating activity
	b. the inputs into the externality-generating activity
	c. the externality-generating activity
	d. the purchasers of the output of the externality-generating activity
10.	New homes built by the airport suffer from noise pollution created by a change in air-traffic patterns. If compensation is paid to the homeowners, _____.
	a. they will internalize the externality
	b. they will use the money to buy soundproofing for their homes
	c. it should be equal to the marginal cost of their harm
	d. it will reduce or eliminate any incentive to avoid the problem
11.	A change in regulations increases the size of the airplanes that can fly into a local regional airport. The increase in average plane size increases noise pollution considerably. If compensation is to be paid to those harmed by this externality, the most efficient form of compensation would be _____.
	a. a lump sum payment
	b. a payment per violation
	c. a set payment every month
	d. regular payments equal to the monthly cost imposed on homeowners
12.	Marketable pollution rights _____.
	a. make producers pay for polluting
	b. are inherently wrong
	c. give producers incentive to internalize external costs
	d. do nothing to reduce pollution in the long run
13.	Positive externalities can be dealt with by _____ them.
	a. subsidizing
	b. taxing
	c. regulating
	d. encouraging