If an Emissions Tax Is Too Low

question 127

Multiple Choice

If an emissions tax is too low:

• A)there will be too little pollution.
• B)there will be too much pollution.
• C)the marginal social cost of pollution will be less than the marginal social benefit of pollution.
• D)there could be either too much or too little pollution.

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Definitions:

Contribution Margin

The amount by which the sale of a product exceeds its variable costs, contributing to covering fixed costs and generating profit.

Break-Even

The point at which total costs and total revenues are equal, meaning no net loss or gain, and the business is just covering all its expenses.

Fixed Expenses

Costs that remain constant for a given period regardless of the level of production or sales volume.

Break-Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain for the business.