To Internalize an Externality, a Corrective Tax Must Be Set

question 10

True/False

To internalize an externality, a corrective tax must be set equal to the marginal external cost.

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Definitions:

Simple Diffusion

A process where molecules move from an area of higher concentration to an area of lower concentration until equilibrium is reached, without the need for energy input.

Pressure-Flow Model

A hypothesis describing how sugars are transported in plants, particularly how sucrose is moved from photosynthetic tissues to various parts of the plant through the phloem.

Phloem

The vascular tissue in plants responsible for the transport of sugars and nutrients throughout the plant.

Water Potential

The potential energy of water per unit volume relative to pure water, which determines the direction water will flow.