Setting Taxes Equal to Marginal External Costs Are Modeled by Creating

question 63

Multiple Choice

Setting taxes equal to marginal external costs are modeled by creating a new social cost curve that is

• A)lower than the original supply curve.
• B)higher than the original supply curve.
• C)lower than the original demand curve.
• D)higher than the original demand curve.

---

Definitions:

Fixed Price

Refers to the set cost of a good or service that does not change regardless of variations in the market or production costs.

Purchase Obligation

An agreement that legally binds a company to buy a specified amount of goods or services at predetermined prices in the future.

Gross Profit Margin

A financial metric that indicates the percentage of revenue that exceeds the cost of goods sold, showing the financial health and profitability of a company's core activities.

Gross Profit Percentage

A financial ratio that compares the gross profit of a business to its net sales, expressed as a percentage.