A Pollution Tax

question 7

Multiple Choice

A pollution tax

• A) is a method used to internalize external costs.
• B) will not affect the price of the good being produced.
• C) does not affect the quantity of a good demanded.
• D) is a method used to externalize internal costs.

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Definitions:

Social Regulation

Regulations aimed at protecting public welfare, including health, safety, and the environment, rather than focusing solely on economic efficiency.

Food And Drug Administration

A federal agency of the United States Department of Health and Human Services responsible for protecting and promoting public health by controlling and supervising the safety of foods, dietary supplements, prescription and over-the-counter pharmaceutical drugs, vaccines, biopharmaceuticals, medical devices, and veterinary products.

Herfindahl Index

A measure of market concentration used to evaluate the level of competition within an industry, calculated by summing the squares of the market shares of all firms in the industry.

Market Power

Market power refers to the ability of a firm or group of firms to raise and maintain prices above the level that would prevail under competition, often leading to decreased market efficiency.