When a Firm Imposes an External Social Cost, the Government

question 92

True/False

When a firm imposes an external social cost, the government should impose a tax exactly equal to the marginal social cost to ensure that the efficient level of output will be produced.

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Definitions:

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including the repayment schedule, interest rate, and due dates.

Invoice

A document issued by a seller to a buyer that lists the products or services sold, their quantities, and the prices charged.

Supplier

A supplier is an entity or person that provides products or services to another business, often a key component in the supply chain of manufacturing and retail operations.

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding costs of goods sold, such as rent, salaries, and utilities.