To reach an economically efficient output level, the size of an excise tax imposed on a firm generating a negative externality should be:
a. the firm's marginal cost.
b. the social marginal cost.
c. the difference between the social marginal cost and the firm's marginal cost.
d. the sum of the social marginal cost and the firm's marginal cost.
c
You might also like to view...
What is not one of the reasons why farmers prefer price supports more than direct income supplements?
a. Direct income supplements tend to remain fixed over time. b. Direct income supplements tend to provide lower benefits. c. Direct income supplements tend to go predominantly to poor farmers. d. Direct income supplements tend to be viewed as demeaning.
A regressive tax structure is one: a. in which the tax rate increases as the base increases
b. in which the tax rate remains the same as the base increases. c. that tends to discourage additional work as income rises. d. that is famous and in use in the U.S. e. in which the tax rate increases as the base increases.
What are the factors that can shift the supply of financial capital to a certain investment?
a. if people do not want to alter their existing levels of risk b. if the riskiness or return on one investment is the same as other investments c. if the riskiness or return on one investment changes relative to other investments d. if people do not want to alter their existing levels of consumption
When do firms pay efficiency wages? What is the relationship between moral hazard and efficiency wages?
What will be an ideal response?