-Refer to Above Figure in Which Negative Externality Existed

question 93

Multiple Choice

-Refer to above figure in which negative externality existed. The government imposes a $1.00 pollution tax on the producer. Supply shifts leftward.

• A) This tax will be shifted entirely to the consumer.
• B) This tax will be borne entirely by the producer.
• C) The amount of the tax shifted to the consumer depends on the consumer's reaction.
• D) The tax will be divided into equal amounts between consumer and producer.

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Definitions:

Production Possibilities

A concept in economics that describes the different combinations of goods and services that can be produced given fixed resources and technology.

Specialize

To focus on a particular area of study, work, or production, often improving efficiency and quality in that domain.

Trade

An exchange of goods or services between two or more parties.

Production Possibilities

The various combinations of goods and services that can be produced from a fixed set of resources.