When Producing a Good Creates Pollution, an External Cost, and the Government

question 104

Multiple Choice

When producing a good creates pollution, an external cost, and the government imposes a tax equal to the marginal external cost, then

• A) transaction costs will be high.
• B) the efficient amount of the good will be produced.
• C) the amount of output moves farther away from the efficient amount.
• D) property rights must have already been established.

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