According to Pigovian Analysis,when Is a Tax Necessary to Improve

question 35

Multiple Choice

According to Pigovian analysis,when is a tax necessary to improve the market's economic efficiency?

• A) When high transactions costs prevent private bargaining.
• B) When the social marginal cost of production exceeds the private marginal cost.
• C) When consumption of the good creates external benefits for others.
• D) When at the competitive equilibrium,the social marginal benefit of the good equals its social marginal cost.

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Definitions:

Contract Is Signed

The formal agreement between parties becomes legally binding when all necessary signatures are affixed to the document.

Cash Flow From Assets

The total amount of money being transferred into and out of a company's assets, indicating the company's financial health and operational efficiency.

Operating Cash Flow

The cash generated by a company's normal business operations, reflecting its ability to generate sufficient cash to meet its needs.

Net New Borrowing

Net new borrowing is the difference between the amounts a company borrows and repays during a specific period, reflecting changes in its debt level.