If a Pigovian Tax Is Levied on Producers, the Supply

question 106

Multiple Choice

If a Pigovian tax is levied on producers, the supply curve will shift straight _______ and the equilibrium quantity will _______.

• A)up; decrease
• B)down; decrease
• C)up; increase
• D)down; increase

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Definitions:

Relative Risk

The level of uncertainty or volatility of an investment in comparison to another investment or to a market benchmark.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window; also used in discounted cash flow (DCF) analysis to determine present value.

NPV

A strategy employed in capital budgeting, Net Present Value is instrumental in determining the financial viability of an investment or project.

Projected Cash Flows

Estimates of the amounts of money a company expects to receive and pay out over a certain period in the future.