To Eliminate the Inefficiency Resulting from an External Cost of Production

question 321

Multiple Choice

To eliminate the inefficiency resulting from an external cost of production, the government can impose a tax on producers that is equal to the

• A) MSB.
• B) MC.
• C) marginal external cost.
• D) MSC.

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Definitions:

Binomial Probabilities

The probabilities of achieving a specific number of successes in a fixed number of Bernoulli trials, characterized by only two possible outcomes.

Poisson Random Variable

A variable that follows the Poisson distribution, mainly used to model the number of times an event happens in a fixed interval of time or space.

Discrete Random Variable

A type of random variable that assumes a countable number of distinct values, often representing outcomes of a random process.

Poisson Random Variable

A statistical measure that represents the number of events occurring in a fixed interval of time or space which are independent of each other.