-Refer to Above Figure in Which Negative Externality Existed

question 93

Multiple Choice

-Refer to above figure in which negative externality existed. The government imposes a $1.00 pollution tax on the producer. Supply shifts leftward.

• A) This tax will be shifted entirely to the consumer.
• B) This tax will be borne entirely by the producer.
• C) The amount of the tax shifted to the consumer depends on the consumer's reaction.
• D) The tax will be divided into equal amounts between consumer and producer.

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Definitions:

Common Stock

Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Accounting Period

A specific time frame in which financial transactions are recorded and financial statements are prepared, commonly a fiscal quarter or year.

Voting Common Stock

Shares that give the shareholder the right to vote on corporate matters, such as electing the board of directors, at shareholder meetings.

Long-Term Investments

Assets that a company intends to hold for more than one year, such as stocks, bonds, real estate, and other securities.