When the Production of a Good Creates an External Cost

question 28

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

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Definitions:

Team Effort

The collaborative work done by a group of people towards achieving a common goal or completing a task.

Operations Charts

Graphical representations used in business and engineering to outline the steps involved in a process or a system, highlighting interactions and workflows.

Formal Structures

The officially designated channels of communication and authority within an organization, typically outlined in organizational charts and manuals.

Line Units

Are workgroups that conduct the major business of the organization.