If Burning Coal Creates a Pollution Externality, the Government May

question 55

Multiple Choice

If burning coal creates a pollution externality, the government may impose a

• A)user fee on the polluter's marginal external benefit.
• B)cost-benefit analysis on the polluter.
• C)subsidy on coal.
• D)tax on coal.
• E)pollution right.

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Definitions:

Marginal Cost

The rise in expenses for the production of an additional unit of a product or service.

Downstream Division

A sector of a company or industry that focuses on the final stages of production and distribution to end-users, often involving refining, selling, and distribution processes.

Transfer Price

The price at which goods and services are sold between departments or subsidiaries within the same company.

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, including expenses like lease payments, employee wages, and insurance fees.