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To Eliminate the Inefficiency Resulting from an External Cost of Production

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To eliminate the inefficiency resulting from an external cost of production, the government can impose a tax on producers that is equal to the


Definitions:

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price over a specified period.

Total Revenue

The overall income generated by a business from its sale of goods or services, calculated as the price per unit times the number of units sold.

Elasticity Of Supply

A measure of how much the quantity supplied of a good changes in response to a change in price.

Price Elastic

A characteristic of goods for which demand or supply changes significantly when the price changes.

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