According to Pigovian analysis, when is a tax necessary to improve the market's economic efficiency?
a. When high transactions costs prevent private bargaining.
b. When the social marginal cost of production exceeds the private marginal cost.
c. When consumption of the good creates external benefits for others.
d. When at the competitive equilibrium, the social marginal benefit of the good equals its social marginal cost.
b. When the social marginal cost of production exceeds the private marginal cost.
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For a good whose production creates a pollution, when marginal social cost equals marginal social benefit, then
I there is no pollution. II resources are utilized efficiently. A) I only B) II only C) neither I nor II D) both I and II
The long-run supply curve in a constant-cost, perfectly competitive industry is
A) perfectly inelastic. B) upward sloping. C) downward sloping. D) perfectly elastic.