When the Production of a Good Creates an External Cost

question 112

Multiple Choice

When the production of a good creates an external cost, one method of achieving the efficient allocation is to impose a tax such that

• A) MC + tax = MSC.
• B) MB + tax = MSC.
• C) MB - tax = MSB.
• D) MC - tax = MSB.

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Definitions:

Fats

Organic compounds made of carbon, hydrogen, and oxygen that are a key source of energy for the body and aid in the absorption of vitamins.

Double Bond

A chemical bond between two chemical elements involving four bonding electrons instead of the usual two.

Fatty Acid

A long hydrocarbon chain with a carboxylic acid group, found in fats and oils.

Shape

In chemistry, refers to the geometric arrangement of atoms in molecules or crystal structures.