The Idea Behind the Pollution Tax Equal to the External

question 95

Multiple Choice

The idea behind the pollution tax equal to the external cost per unit of pollution is to

• A) increase the social benefit to be above the marginal cost.
• B) internalize the externality.
• C) allow the firm to evade external costs.
• D) drive polluting firms out of developed countries.

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Definitions:

Net Working Capital

The disparity between a firm's existing assets and its immediate debts.

NPV Computation

The process of calculating the Net Present Value of an investment, which assesses the profitability by comparing the present value of cash inflows to the initial investment.

Statement of Comprehensive Income

A financial statement merging the income statement and other comprehensive income items like unrealized gains or losses on investments.

Pro Forma Statements

Financial statements that are based on hypothetical scenarios or assumptions about a company's future performance.