Assume That Production from an Electric Utility Caused Acid Rain

question 155

Multiple Choice

Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain.This is an example of

• A)a transactions cost.
• B)a Pigovian tax.
• C)a Pigovian subsidy.
• D)the Coase Theorem.

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Definitions:

Pension Liability

The amount of money a company is required to pay into its employees' retirement plans in the future.

Accumulated Benefit Obligation

An estimate of the total amount of an employer's obligation for pension benefits earned by employees to date, not based on future salary increases.

Plan Assets

Assets specifically identified to fund the obligations of a pension or other employee benefit plan.

Pension Funding

The financial contributions made by a company to a defined benefit pension plan to meet future pension obligations to retirees.