Question : 89) Suppose a firm pollutes a river when it produces : 1241039

 

89) Suppose a firm pollutes a river when it produces a product. To achieve the efficient amount of output, a government could impose a ________ that equals the ________ of the pollution.

A) pollution charge; marginal social cost

B) pollution charge; marginal external cost

C) pollution tax; marginal social cost

D) pollution tax; marginal external cost

E) pollution subsidy; marginal social cost

 

90) In order for pollution taxes to be effective in eliminating the deadweight loss resulting from pollution, the pollution tax must be set equal to the

A) marginal private cost.

B) marginal external cost.

C) marginal social cost.

D) marginal benefit of polluting.

E) price of the good.

 

91) To eliminate the inefficiency resulting from pollution that creates an external cost, the government can impose a pollution tax on producers that is equal to the

A) MSB.

B) MC.

C) marginal external cost.

D) MSC.

E) price.

92) If the government taxes producers that create pollution, the government’s policy

A) allows the producers to pollute more by increasing their costs.

B) results in less production because the producers’ costs have risen.

C) eliminates pollution entirely by shifting the supply curve leftward.

D) allows the firms to pass along higher costs but doesn’t cut pollution.

E) forbids the firms from passing along higher costs.

 

93) A tax on a polluting industry

A) is not desirable because it reduces efficiency.

B) leads to less output in this industry.

C) causes more resources to be used in the polluting industry.

D) shifts the marginal social benefit curve leftward.

E) shifts the marginal social benefit curve rightward.

 

94) If the government taxes an industry that creates pollution, the tax

i.decreases the pollution.

ii.increases the price of the product produced by the firms.

iii.decreases the quantity of the good produced.

A) i only.

B) ii only.

C) ii and iii.

D) i and iii.

E) i, ii, and iii.

95) If a pollution tax in a market with an external cost changes the market so that it produces the efficient level of output, which of the following occurs?

i.The supply curve shifts leftward.

ii.The price increases.

iii.The quantity produced decreases.

A) i only

B) ii only

C) iii only

D) i and ii

E) i, ii, and iii

 

96) When government levies pollution taxes on sellers to eliminate the inefficiency from the cost of pollution, the result is

A) a lower price.

B) a smaller quantity produced.

C) a smaller cost of production.

D) a rightward shift of the supply curve.

E) leftward shifts of the supply and demand curves.

97) The figure above illustrates the gasoline market. There is no external benefit from gasoline. If this market is left unregulated and no pollution tax is imposed, the equilibrium quantity of gasoline is

A) 0 gallons.

B) 5 million gallons.

C) 10 million gallons.

D) 20 million gallons.

E) 15 million gallons.

 

98) The figure above illustrates the gasoline market. There is no external benefit from gasoline. If a pollution tax equal to the marginal external cost is imposed on gasoline, then the quantity of gasoline produced and consumed equals

A) 0 gallons.

B) 5 million gallons.

C) 10 million gallons.

D) 20 million gallons.

E) None of the above answers is correct.

99) The figure above illustrates the gasoline market. There is no external benefit from gasoline. If a tax on gasoline is imposed as shown in the figure, then the total tax revenue earned by the government equals

A) $24 million.

B) $16 million.

C) $8 million.

D) more than $24 million.

E) less than $8 million.