A Tax Equal to the External Marginal Cost of an Activity

question 217

Multiple Choice

A tax equal to the external marginal cost of an activity yields the efficient level of production because the tax

• A) achieves the competitive equilibrium.
• B) forces producers to face all costs of production including the external cost.
• C) ensures greater profits for the firm.
• D) eliminates all pollution.

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Definitions:

Five-factor Model

A model proposing that five broad dimensions underlie all human personality traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Conscientiousness

An attribute in an individual's character that involves being structured, dependable, and possessing a serious dedication to duties.

Dependable

Capable of being relied on; trustworthy or reliable.

Conscientiousness

A quality in a person that includes being orderly, trustworthy, and having a deep commitment to obligations.