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

question 93

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

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Definitions:

Gestalt Grouping

Principles in psychology that explain how humans naturally organize visual elements into groups or unified wholes when certain principles are applied, such as similarity or proximity.

Subjective Contour

A visual illusion where contours are perceived where none actually exist, often created by surrounding stimuli.

Diamond

A naturally occurring or synthetically produced gemstone made of carbon, known for its exceptional hardness and brilliance.

Parsing

The process of analyzing a text, made up of written language, into its constitutive elements to understand its grammatical structure.