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

Question

Quizplus · Accepted Answer

A pollution tax internalizes the external cost, causing the supply curve to shift leftward (i), leading to an increase in price (ii) and a decrease in the quantity produced (iii) to reach the efficient level of output.

If a Pollution Tax in a Market with an External