When the Production of a Good Creates an External Cost

question 15

Multiple Choice

When the production of a good creates an external cost, in order for taxes to be effective in achieving the efficient allocation of resources, the tax must be set equal to the

• A) marginal external cost.
• B) marginal social cost.
• C) marginal benefit of polluting.
• D) marginal private cost.

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Definitions:

Neural Crest Cells

Cells derived from the crests of the forming neural tube in the embryo; together with the mesoderm, they form the mesenchyme of the embryo; they give rise to part of the skull, the teeth, melanocytes, sensory neurons, and autonomic neurons.

Adrenal Cortex

The outer region of the adrenal glands that produces vital steroid hormones such as cortisol, aldosterone, and androgens.

Enteric Nervous System

The Enteric Nervous System is a network of neurons that govern the functions of the gastrointestinal tract, often referred to as the "second brain."

Oropharyngeal Membrane

The oropharyngeal membrane is an embryonic structure that contributes to the formation of the mouth and pharynx in a developing embryo.