Multiple Choice
Suppose that at present there are no laws to restrict pollution produced by the widget industry.Assume that the supply and demand curves are linear and that the market price of a widget is $20.If the government imposes a tax equal in value to the cost of the pollution,then firms would continue to produce widgets if
A) the cost imposed by the pollution is less than $20 per widget produced.
B) the private cost of producing a widget equals the cost of the pollution generated per widget.
C) $20 minus the private cost of producing a widget is greater than the cost of the pollution generated per widget.
D) $20 minus the private cost of producing a widget is less than the cost of the pollution generated per widget.
Correct Answer:
Verified
Correct Answer:
Verified
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