A Tax Equal to the External Cost on Firms That

question 25

Multiple Choice

A tax equal to the external cost on firms that emit pollutants would:

• A)​provide firms with the incentive to increase the level of activity creating the pollution.
• B)​provide firms with the incentive to decrease the level of activity creating the pollution.
• C)​provide firms with little incentive to search for less environmentally damaging production methods.
• D)​not reduce pollution levels at all.

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Definitions:

Evolutionary Perspective

An approach in psychology that emphasizes the role of natural selection and adaptation in the development of behavior and mental processes.

Cognitive Perspective

A psychological approach that focuses on how people perceive, think about, and mentally organize information about the world around them.

Encode

A process of converting data into a format that can be stored, processed, or transmitted.

Process

A series of actions or steps taken to achieve a particular end.