Consider a Market in Which There Is an External Cost

question 77

Multiple Choice

Consider a market in which there is an external cost. A tax can be used to arrive at the efficient market equilibrium because the tax will

• A) increase demand for the good.
• B) decrease demand for the good.
• C) decrease supply of the good.
• D) increase supply of the good.

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Definitions:

Group Think

A psychological phenomenon where the desire for harmony within a group leads to irrational or dysfunctional decision-making outcomes.

Psychiatric Inpatient Setting

A specialized medical facility where individuals with serious mental health conditions receive treatment and care in a controlled environment.

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