Figure 16.2Consider Figure 16.2, which depicts the supply and demand for coal. Assume coal production creates external costs. If PE and QE are the equilibrium price and quantity of coal without government regulation, a pollution tax on the production of coal would ________ the price of coal relative to PE and ________ the quantity of coal relative to QE.
A. increase; decrease
B. increase; not change
C. decrease; not change
D. decrease; decrease
Answer: A
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In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?
a. goods and services b. dollars paid to land, labor, and capital c. dollars spent on goods and services d. wages, rent, and profit
A utilities company in the Netherlands buys wind generators made by a U.S. company. It pays from them with previously obtained dollars. By itself, this exchange
a. increases both U.S. net exports and U.S. net capital outflow. b. decreases both U.S. net exports and U.S. net capital outflow. c. increases U.S. net exports and does not affect U.S. net capital outflow. d. None of the above is correct.
Exhibit 6-1 Business cycle
In Exhibit 6-1, the recession phase of the business cycle can be represented by point(s):
A. CDE. B. BCD. C. EFG. D. A and E.
Of the following, which best explains why Thomas Malthus was incorrect in his prediction that population would outstrip food supplies?
A. Malthus incorrectly believed that economic growth would reduce birthrates. B. Malthus failed to recognize that economic growth is accompanied by smaller family sizes. C. Malthus failed to realize that that human population would increase considerably. D. Malthus incorrectly predicted that modernization would increase the demand for children.