In Order to Internalize the Externality Due to Pollution, the Government

question 115

Multiple Choice

In order to internalize the externality due to pollution, the government should impose a tax based on

• A) the economic damage associated with the pollution.
• B) the physical amount of pollution.
• C) the size of the firm causing the pollution.
• D) the value of the pollution-causing business activity.

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Definitions:

Shares Outstanding

Refers to all of the shares of a corporation that have been issued and are held by shareholders, including those held by the public as well as restricted shares owned by the company’s insiders.

Par Value

The stated or face amount of a bond, stock, or coupon as declared by the issuer.

Common Stock

Equity securities that represent ownership in a corporation, entitling holders to vote on company matters and receive dividends.

Earnings Per Share

Earnings per share (EPS) is a financial ratio that indicates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of profitability.