Steel production creates pollution. If a tax is imposed on steel production equal to the marginal external cost of the pollution it creates, ______
A. steel producers will cut pollution to zero
B. the deadweight loss created by steel producers will be cut to zero
C. the market price of steel will rise by the amount of the tax
D. steel producers will continue to produce the inefficient quantity of steel
B This tax makes the producers' marginal cost equal to the marginal social cost and eliminates the deadweight loss.
You might also like to view...
Price discrimination by sellers usually results in
A) coercing people into buying goods they don't want to purchase. B) coercing people into paying higher prices than they want to pay. C) less total but more net revenue for the seller. D) new and additional opportunities for some buyers.
Suppose a competitive firm's total revenue is $1,000,000 where MR = MC, its explicit variable costs are $900,000, its fixed costs are $90,000 of which $60,000 are sunk in the short run
If its implicit opportunity costs are $50,000, the firm should A) produce because its economic profit is positive. B) produce because its economic profit is zero. C) produce even though its economic profit is negative. D) shut down.
What is true of marginal cost when marginal returns are increasing?
a. It is negative and increasing. b. It is negative and decreasing. c. It is positive and increasing. d. It is positive and decreasing. e. It is positive and has a constant slope.
Fixed exchange rates require governments to have
a. control over the cuntry's exports b. anti-arbitrage investigators c. large quantities of gold d. trade surpluses e. foreign exchange reserves