Suppose a Firm Producing Roof Shingles Imposes a Negative Externality

question 118

Multiple Choice

Suppose a firm producing roof shingles imposes a negative externality on the surrounding area due to the noxious fumes emitted from the plant.The private marginal cost,social marginal cost and marginal benefit associated with the production of the shingles are given by the following equations: = 5 + 2Q = 10 + 3Q MB = 50 - Q
What level of emissions tax (dollars per unit of output produced) would provide this firm with the incentive to produce at the allocatively efficient level of output?

• A)$15
• B)$25
• C)$10
• D)$40
• E)$30

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Definitions:

Predicate

The part of a sentence or clause containing a verb and stating something about the subject (e.g., went home in "John went home").

Standard Form

A way of presenting logical arguments with all premises listed first, followed by the conclusion, often used to clarify logical structure.

Categorical Propositions

Statements that assert or deny that all or some of the members of one category are included in another.

Copula

A linking verb in a sentence, often a form of "to be", connecting the subject to a subject complement.