Graph 10-4 -Refer to Graph 10-4. the Equivalence of a Pigovian Tax

question 195

Multiple Choice

Graph 10-4

-Refer to Graph 10-4. The equivalence of a Pigovian tax and a pollution permit would require that:

• A) P^B be equivalent to the Pigovian tax
• B) Q^A be equivalent to the amount of pollution allowed by the pollution permit holders
• C) the equilibrium price and quantity of pollution be the same in both panel A and panel B
• D) all of the above conditions hold

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Definitions:

Moral Principles

Fundamental guidelines that govern ethical behavior, reflecting what is considered right or wrong in society.

Ethical Egoist

A moral theory asserting that individuals should act in ways that serve their own self-interest, positing that this approach ultimately benefits society as a whole.

Psychological Egoism

The thesis that people always act for their own self-interest, even when it seems as if they are acting for other people’s benefit (for example, in giving to charity, the egoist would say, the person is simply making himself or herself feel self-righteous).

Basic Laws

Fundamental principles or legislations that form the foundation of a legal system or government constitution.