Regardless of Whether a Negative Externality Is Emitted by Consumers

question 19

True/False

Regardless of whether a negative externality is emitted by consumers or by producers, a Pigouvian tax can be imposed on consumers only.

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Definitions:

Fixed Rate

An interest rate that remains constant over the life of a loan or investment, unaffected by market fluctuations.

Derivative

A financial tool whose worth derives from the worth of a different asset.

Call Option

A call option is a financial contract giving the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a predetermined time frame.

Economic Exposure

The risk that a company's cash flow and market value may be affected by unexpected changes in exchange rates.