A Difficulty with Using a Uniform Per-Unit Tax to Address

question 55

Multiple Choice

A difficulty with using a uniform per-unit tax to address a negative externality is that

• A) the tax will reduce output.
• B) the tax will increase price.
• C) the social cost of pollution might vary across geographic regions.
• D) the social cost of pollution should not be assessed on the consumers, but should be assessed on the firms.

---

Definitions:

Receivables

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Sales

The total amount of goods or services sold by a business within a certain period.

Total Assets Turnover Ratio

A financial metric that measures a company's effectiveness in using its assets to generate sales, calculated as sales divided by total assets.

Assets

Resources owned by a company that have economic value and can be converted into cash.