Suppose the Government Imposes a Tax for Each Unit of Pollution

question 20

Multiple Choice

Suppose the government imposes a tax for each unit of pollution that a firm produces.The firm will

• A)stop producing altogether.
• B)reduce emissions until the marginal cost of any further reduction in pollution is equal to or greater than the tax.
• C)reduce emissions until the marginal cost of any further reduction in pollution is equal to the price of the firm's product.
• D)increase output such that the additional revenue can offset this additional tax payment.
• E)ignore the tax and continue to produce the same amount of output.

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Definitions:

Crystallized Intelligence

The ability to use learned knowledge and experience.

Fluid Intelligence

The ability to reason and solve new problems independently of previously acquired knowledge.

Knowledge

Information, understanding, or skill that one gets from experience or education; awareness of a fact or situation.

Western Cultures

Societies primarily found in North America and Western Europe, characterized by values such as individualism, democracy, and capitalism.