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Suppose That a Paper Producer Is Dumping Waste into a Nearby

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Essay

Suppose that a paper producer is dumping waste into a nearby river.The government imposes a tax to correct for this external cost.What will be the effects of this pollution tax on the market for paper in a competitive market?


Definitions:

Microeconomics

The branch of economics that focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders.

Fallacy of Composition

The erroneous belief that what is true for a part will also be true for the whole, or that individual actions will have the same effect when applied collectively.

Positive Economics

The scientific study of “what is” among economic relationships.

Normative Economics

Judgments about “what ought to be” in economic matters. Normative economic views cannot be proved false because they are based on value judgments.

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