If a Pollution Tax Imposed on a Firm Is Smaller

question 6

Multiple Choice

If a pollution tax imposed on a firm is smaller than the external cost

• A) the externality is completely internalized.
• B) the social production cost increases by the amount of the pollution tax.
• C) the pollution tax transfers the full cost borne by people outside the firm back to the firm itself.
• D) the firm is producing too much from society's point of view.

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Definitions:

Spinal Cord

The main pathway for information connecting the brain and peripheral nervous system, crucial for sensory and motor functions below the head.

Bradykinin

A peptide that causes blood vessels to dilate (expand), resulting in lower blood pressure and increased blood flow to certain areas of the body.

Opiate-Like Effects

Effects similar to those produced by opiates (pain relief, euphoria, sedation) that some substances or activities can induce without involving opiate drugs.

Gate Control Theory

A theory of pain holding that structures in the spinal cord act as a gate for sensory input that is interpreted as pain.