When wealthy alumni provide charitable contributions to their universities to reduce the tuition payments of current students it is an example of ?
Correct answer: A. an attempt to internalize a positive externality
- A. an attempt to internalize a positive externality
- B. an attempt to internalize a negative externality
- C. a Pigouvian tax
- D. a command-and-control policy
Explanation
University education can create benefits for others, such as a better-educated society, so contributions that expand access support a positive externality. They are not taxes or regulatory controls because the alumni are encouraging, rather than penalizing or commanding, the activity.
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