When the Government Taxes a Firm That Generates External Costs

question 56

Multiple Choice

When the government taxes a firm that generates external costs, the firm will produce

• A) more units of output than before the tax was imposed in order to continue maximizing profits.
• B) the same number of units of output as before the tax was imposed to continue maximizing profits.
• C) fewer units of output than before the tax was imposed in order to continue maximizing profits.
• D) either more or fewer units of output than before the tax was imposed depending upon what happens to the profit-maximizing level of output.

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Definitions:

Communications Media

Platforms or tools used to store and deliver information or data. It spans traditional media like newspapers and television to digital media such as social media and streaming services.

ARGs

Alternate Reality Games; interactive games that use the real world as a platform, often involving multiple media and game elements to tell a story that may be affected by participants' ideas or actions.

Advergame

A video game that is created specifically to promote a product, brand, or marketing message, blending advertising and gaming.