Question : 91) To eliminate the inefficiency resulting from pollution that creates : 1238621

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.

100) The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. If the government assesses the marginal external cost correctly, what is the amount of the pollution tax that eliminates the inefficiency?

A) $2 per pound

B) $3 per pound

C) $4 per pound

D) $1 per pound.

E) None of the above answers is correct.