According to the Text, If a Policy Is Designed to Move

question 33

Multiple Choice

According to the text, if a policy is designed to move a production process toward efficiency when pollution exists, the best tax is a

• A)lump sum tax on pollution.
• B)progressive income tax.
• C)proportional income tax.
• D)sales tax.

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Definitions:

Constant Returns

A situation where increasing the amount of inputs in the production process proportionally increases the output, implying a linear relationship between inputs and outputs.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good changes as production increases.

Profit Maximization

A process or strategy employed by businesses to increase their net profits to the highest possible level.

Output Increases

A situation where the production or yield of goods and services in an economy grows over a certain period.