Figure 9.10
-The pollution tax in Figure 9.10
A) reduces equilibrium output.
B) reduces equilibrium price.
C) increases supply.
D) all of the above

Question

Figure 9.10
-The pollution tax in Figure 9.10
A) reduces equilibrium output. 
B) reduces equilibrium price. 
C) increases supply. 
D) all of the above

Quizplus · Accepted Answer

A pollution tax increases the cost of production, leading to a decrease in supply. This results in a higher equilibrium price and lower equilibrium output, not a reduction in equilibrium price or an increase in supply.

Figure 9.10 -The Pollution Tax in Figure 9.10