When Negative Externalities Exist in a Market,if the Producers Are

question 11

Multiple Choice

When negative externalities exist in a market,if the producers are forced to pay a Pigouvian tax then:

• A) those who interact in the market will lose surplus.
• B) those who interact in the market will gain surplus.
• C) producers will gain surplus.
• D) those who do not interact in the market but are affected by the externality will lose surplus.

---

Definitions:

Politicians

Individuals involved in politics, especially those holding or seeking office in government.

Fiscal Policy

Government policy relating to taxation and spending, used to influence economic conditions.

Lyndon B. Johnson

The 36th President of the United States, known for his Great Society social service programs and significant role in the Vietnam War.

Tax Cut

A reduction in the amount of taxes imposed by the government on individuals or businesses, often aimed at stimulating economic growth.