A Tax on Polluting Firms

question 96

Multiple Choice

A tax on polluting firms

• A)would shift the LRAC curve upward.
• B)would shift the LRAC curve downward.
• C)would have the same impact on the firm as a subsidy.
• D)tends to have the perverse effect of increasing pollution.

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Definitions:

Whitewater Rafting

A recreational outdoor activity which uses an inflatable raft to navigate through rough or whitewater rivers.

Producer Surplus

The difference between the amount a producer is willing to accept for a good or service and the actual amount received from selling it at the market price.

Cupcakes

Small, individually-sized cakes that are typically frosted and decorated, often used to celebrate events or milestones.

Total Surplus

Total surplus is the sum of consumer surplus and producer surplus in a market, representing the total benefits to both buyers and sellers from trade.