Which of the Following Is an Example of a Pigovian

question 27

Multiple Choice

Which of the following is an example of a Pigovian tax?

• A)payments by utilities to obtain tradable emission allowances
• B)a payroll tax
• C)payments for licenses to pollute
• D)a tax imposed on a utility that internalizes the cost of externalities caused by the utility

Understand the conditions under which a monopoly maximizes its profits, including how to determine optimal output levels and pricing strategies.

Gain insight into the societal impacts of monopolies, including potential societal losses and the role of rent-seeking activities in monopoly profits.

Understand the relationship between marginal cost, average cost, and profit maximization for monopolies.

Analyze the role of government in creating or mitigating monopolistic markets through policies such as patents and franchises.

---

Definitions:

Standard Deviation

A statistical measure that quantifies the variability or dispersion of a dataset relative to its mean; used to gauge the amount of variation or spread in a set of data points.

Percentile

A measure indicating the value below which a given percentage of observations in a group of observations falls.

Normal Random Variable

A variable whose values are distributed according to a normal distribution.

Mean

A measure of central tendency that is calculated by summing the values in a dataset and dividing by the number of values.