When the Production of a Good Creates an External Cost

question 28

Multiple Choice

When the production of a good creates an external cost, in order for taxes to be effective in achieving the efficient allocation of resources, the tax must be set equal to the

• A) marginal private cost.
• B) marginal external cost.
• C) marginal social cost.
• D) marginal benefit of polluting.

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Definitions:

Export Controls List

A regulatory document or framework that specifies goods, software, or technology that are restricted or controlled for export, to comply with national security and trade policies.

Export Broker

An individual or company that acts as an intermediary, helping businesses to sell and distribute products to foreign markets without having to deal with the complexities of export regulations directly.

Government Export Approval

An official authorization required for goods to be sent out of a country.

Disclose Fee

A charge that must be paid, which is revealed or made known to a party, typically in transactions involving services or financial products.