The Marginal External Cost Associated with Paper Production Is Constant

question 32

Multiple Choice

The marginal external cost associated with paper production is constant at $10 per ton per year.The competitive market equilibrium for paper production is currently 10 million tons per year.A corrective tax on paper production will:

• A)collect $100 million annually.
• B)collect more than $100 million annually.
• C)collect less than $100 million annually.
• D)reduce annual damages to those other than buyers and sellers of paper to zero.

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