Assume That Production from an Electric Utility Caused Acid Rain

question 32

Multiple Choice

Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of

• A) a transaction cost.
• B) a Pigovian tax.
• C) a Pigovian subsidy.
• D) the Coase Theorem.

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Definitions:

Units of X

A measure or quantity of a particular good, product, or factor of production expressed as a discreet unit for analysis or transaction purposes.

Income

The amount of money received by an individual or entity in exchange for labor or services, from investments, or from other sources.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given income and prices, illustrating the trade-offs between them.

Punk Rock

A music genre that emerged in the mid-1970s, characterized by its fast-paced tempo, short songs, aggressive musicianship, and often politically charged lyrics.