Suppose that the city of Cleveland has set an emissions tax to reduce the amount of pollution going into the Cuyahoga River. Assume that the optimal tax would be $700 but that government officials have set the tax at $1,200. At the equilibrium with the $1,200 tax:
A) there will be too much pollution.
B) the marginal social cost of pollution will be less than $1,200.
C) the marginal social benefit of pollution will be $1,200.
D) the marginal social benefit of pollution will be more than $1,200.
Correct Answer:
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