Who loses surplus when consumers in a market are forced to pay a Pigouvian tax for a negative externality?
A. Producers
B. Consumers
C. Others affected by the externality
D. Both producers and consumers lose surplus when negative externalities are internalized.
Answer: D
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Output per worker is defined as
a. resource productivity b. the output-worker ratio c. labor productivity d. worker's GDP e. productive consumption
Answer the following statements true (T) or false (F)
1. Behavioral economics developed as a field of study that looks into how people make rational decisions based on self-interest. 2. One major point of disagreement between neoclassical economics and behavioral economics is the assumption of rationality. 3. Neoclassical economics and behavioral economics are similar in the assumption that people are capable of making accurate, sometimes complex, calculations with respect to their utility-maximizing decisions. 4. Neoclassical economics focuses on predicting behavior of economic agents, whereas behavioral economics focuses on the mental processes involved in decision-making. 5. Behavioral economics hopes to eventually fully replace the neoclassical economic model.