To Correct for a Negative Externality, a Government Might Impose

question 97

Multiple Choice

To correct for a negative externality, a government might impose a uniform tax related only to the physical quantity of pollution if

• A) the administrative costs are high.
• B) the cost of ascertaining the actual economic costs are relatively small.
• C) the economic damages are zero.
• D) the economic damages associated with the pollution are different across different locations.

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Definitions:

General Journal

A journal used to record all types of accounting transactions with detailed explanations.

Permanent

Refers to accounts that represent the financial standing of a company and carry their ending balances over from one accounting period to the next, such as assets, liabilities, and equity accounts.

Federal Treasury

A government's department responsible for managing public revenue, including issuing currency, collecting taxes, and funding public services.

Permanent

Refers to accounts or records in the general ledger that are not closed at the end of the accounting period, such as assets, liabilities, and equity accounts.