If a Pollution Tax Imposed on a Firm Is Smaller

question 157

Multiple Choice

If a pollution tax imposed on a firm is smaller than external cost,

• A)the externality is completely internalized.
• B)the social production cost increases by the amount of the pollution tax.
• C)the pollution tax transfers the full cost borne by people outside the firm back to the firm itself.
• D)the firm is producing too much from a societyʹs point of view.

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