a. When a firm imposes an external social cost (negative externality), the government should impose a tax on production equal to the externality cost to ensure that the market will achieve the socially optimal outcome. Select one: True False
a. When a firm imposes an external social cost (negative externality), the government should impose a tax on production equal to the externality cost to ensure that the market will achieve the socially optimal outcome. Select one: True False
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.4P
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Question
a. When a firm imposes an external social cost (negative externality), the government should impose a tax on production equal to the externality cost to ensure that the market will achieve the socially optimal outcome.
Select one:
True
False
b. The socially optimal level of emissions of most pollutants is zero.
Select one:
True
False
c. Externalities are only inefficient when they impose a cost. They are not inefficient when they bestow a benefit.
Select one:
True
False
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