When a Producer Operates in a Market Characterised by Negative

question 45

Multiple Choice

When a producer operates in a market characterised by negative production externalities, a tax that forces them to internalise the externality will:

• A)give sellers the incentive to take account of the external effects of their actions
• B)have an offsetting effect that reduces the producer's private production costs
• C)increase the amount of the commodity exchanged in market equilibrium
• D)restrict the producer's ability to take the costs of the externality into account when deciding how much to supply

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Definitions:

Facebook And Instagram

Social media platforms that allow users to share content, communicate, and connect with others online.

Fundamental Attribution Error

The tendency to overestimate the influence of personality and underestimate the influence of situational factors when evaluating others' behaviors.

Good Behavior

Actions or conduct that are considered polite, respectful, and appropriate in a given social context.

Bad Behavior

Actions or conduct that are inappropriate, disruptive, or violate societal or specific set rules or norms.