An Optimal Tax on Pollution Would Result in Which of the Following

question 424

Multiple Choice

An optimal tax on pollution would result in which of the following?

• A)Producers will choose not to produce any pollution.
• B)Producers will internalize the cost of the pollution.
• C)Producers will maximize production.
• D)The value to consumers at market equilibrium will exceed the social cost of production.

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Definitions:

Inflation Rate

The velocity at which the broad price level of goods and services climbs, reducing purchasing capability.

Aggregate Demand

The total demand for all goods and services within a particular economy at a given overall price level and in a given period.

Aggregate Supply

The total output of goods and services that producers in an economy are willing and able to supply at a given overall price level in a specified time period.

Price Levels

The midpoint of prices for every type of good and service produced economically.