-The Figure Above Shows a Tax Imposed on a Good

question 92

Multiple Choice

-The figure above shows a tax imposed on a good with an external cost. The area of the rectangle abcd equals

• A) the MC.
• B) the total tax revenue collected by the government.
• C) the amount of pollution tax per tonne.
• D) the MSB.
• E) the deadweight loss.

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Definitions:

Output

The total amount of goods or services produced by a company or economy.

Total Cost

The total expense incurred in the production of goods or services, including both fixed and variable costs.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced.

Marginal Cost

The change in total production cost that arises when the quantity produced is incremented by one unit.