If a Pollution Tax Imposed on a Firm Is Greater

question 10

Multiple Choice

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

• A)the externality will be fully internalized.
• B)the social production cost will increase by the amount of the pollution tax.
• C)the pollution tax will be efficient.
• D)the firm will be producing too little from a societyʹs point of view.

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Definitions:

Sensation

The process by which our sensory receptors and nervous system receive and represent stimulus energies from our environment.

Extrasensory Perception (ESP)

A supposed ability of the human mind to acquire information without the use of the known (sensory) channels of communication.

Photoreception

The biological process by which organisms detect and respond to light, primarily through specialized light-sensitive cells.

Precognition

The purported psychic ability to see events in the future before they happen, outside the boundaries of known physical mechanisms.