A Tax on a Good Whose Production Causes Pollution Will

question 55

Multiple Choice

A tax on a good whose production causes pollution will

• A)raise the equilibrium price and lower the equilibrium quantity.
• B)lower the equilibrium price and lower the equilibrium quantity.
• C)raise the equilibrium price and raise the equilibrium quantity.
• D)lower the equilibrium price and raise the equilibrium quantity.

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Definitions:

Production Possibility Frontier

A graphical representation showing the maximum combination of goods and services that can be produced using all available resources efficiently.

Full Employment

A situation where all available labor resources are being used in the most economically efficient way.

Efficient

Optimal productivity with minimal waste of resources, achieving the best possible outcome with the inputs available.

Production Possibility Frontier

A graphical representation showing the maximum combination of goods or services that can be produced with a given set of resources.