What would be an optimal tax on pollution (a negative externality)?
a) one for which producers internalize the cost of the pollution
b) one for which a benevolent social planner is able to maximize production
c) one for which producers choose not to produce any pollution
d) one for which the value to consumers at market equilibrium exceeds the cost of production (including tax)
Ans: a) one for which producers internalize the cost of the pollution
You might also like to view...
The profits of a partnership are
A) taxed as personal income. B) subject to a corporate tax. C) taxed as capital gains indexed for inflation. D) exempt from taxation.
An increase in the price of MP3 players will result in
A) a smaller quantity of MP3 players supplied. B) an increase in the supply of MP3 players. C) a decrease in the demand for MP3 players. D) a larger quantity of MP3 players supplied.