When External Costs Are Present and the Government Imposes a Tax

question 75

Multiple Choice

When external costs are present and the government imposes a tax equal to the marginal external cost, then

• A) efficiency can be achieved.
• B) property rights must have already been established.
• C) transaction costs will be high.
• D) the marginal benefit of the external cost will fall.

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Definitions:

Renal

Relates to the kidneys and their functions in the body.

Renal Medulla

The innermost part of the kidney that contains structures crucial for the concentration of urine.

Pyelonephritis

A type of urinary tract infection that has reached the kidney, potentially causing kidney damage.

Glomerulonephritis

An inflammation of the glomeruli, the small blood vessels in the kidneys, potentially leading to kidney damage and impairing kidney function.