A Shift from S1 to S2 Reflects the Change That

question 330

Multiple Choice

A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account.A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures.Externalities exist in both panels.After correcting for the externalities the prices should be

• A) and .
• B) and .
• C) and .
• D) and .

Identify the factors influencing the burden distribution of taxes between buyers and sellers.

Recognize the role of government in tax imposition and its impact on market outcomes.

Explain the concept of payroll taxes and how they are shared between employers and employees.

Understand the impact of price controls and taxes on market shortages and surpluses.

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