Refer to Figure 28

question 136

Multiple Choice

Refer to Figure 28.2.Assume this firm initially has marginal costs equal to Private MC₁ and is polluting.If the government decides to use emission charges to reduce pollution,the firm's MC curve will shift to

• A)MC₃ and the rate of output will decrease.
• B)MC₃ and the rate of output will increase.
• C)MC₂ and the rate of output will decrease.
• D)MC₂ and the rate of output will increase.

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Definitions:

Normal Balance

The side of the account (debit or credit) on which increases to the account are recorded, based on the account type.

Financial Statement

Official documents detailing the monetary transactions and financial status of a company, person, or any distinct unit.

Permanent/Temporary

Describes items or accounts within financial accounting that either persist over time (permanent) or are expected to be concluded within a certain period (temporary).

Normal Balance

The side (debit or credit) on which entries increase an account's balance, based on the accounting equation.