A Difficulty with Using a Uniform Per-Unit Tax to Address

question 55

Multiple Choice

A difficulty with using a uniform per-unit tax to address a negative externality is that

• A) the tax will reduce output.
• B) the tax will increase price.
• C) the social cost of pollution might vary across geographic regions.
• D) the social cost of pollution should not be assessed on the consumers, but should be assessed on the firms.

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Definitions:

Cost of Goods Sold

Material and labor costs that are directly attributable to the manufacturing of a company’s products.

Sales

In the context of business, sales refer to the transactions and activities involved in selling goods or services to customers, often measured in terms of the total revenue generated.

Operating Cycle

The total time period from the acquisition of resources for production to the collection of payments from the sale of the goods or services produced.

Sales

The total amount of goods or services sold by a company, also a critical indicator of a company's performance and market demand.