-In Exhibit N-4, if the government uses a pollution tax to correct the externality problem, how much tax revenue will the government receive?
A) $12.60
B) $10.50
C) $66.50
D) $63
E) $9

Question

-In Exhibit N-4, if the government uses a pollution tax to correct the externality problem, how much tax revenue will the government receive?
A) $12.60 
B) $10.50 
C) $66.50 
D) $63 
E) $9

Quizplus · Accepted Answer

The correct tax revenue is calculated by multiplying the tax per unit by the quantity of pollution reduced. The tax per unit is typically the difference between the social cost and the private cost at the socially optimal quantity. The exact figures would depend on the data provided in Exhibit N-4, which is not available here.

-In Exhibit N-4, If the Government Uses a Pollution Tax