A Tax Equal to the External Marginal Cost of an Activity

question 217

Multiple Choice

A tax equal to the external marginal cost of an activity yields the efficient level of production because the tax

• A) achieves the competitive equilibrium.
• B) forces producers to face all costs of production including the external cost.
• C) ensures greater profits for the firm.
• D) eliminates all pollution.

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Definitions:

Attention

The concentration of awareness on some phenomenon to the exclusion of other stimuli.

Memory Process

The series of processes involved in the encoding, storing, and retrieving of memories.

Retrieval

Retrieval is the process of accessing and bringing into consciousness information stored in memory. It is a critical aspect of the memory process.

Sensory Store

A very brief type of memory that holds incoming information from the senses for a very short duration, nearly half a second for visual information and a few seconds for auditory information.