Suppose the government imposed a carbon tax on firms that emit pollution.Then

Question

Quizplus · Accepted Answer

With the imposition of a carbon tax, the cost of production for firms emitting pollution would increase. This increase in cost would lead to an increase in the marginal cost of production, causing firms to produce less output at any given price level. As a result, the supply curves within the market would shift to the left, indicating a decrease in the quantity supplied. Thus, choice A is the correct answer.

Suppose the Government Imposed a Carbon Tax on Firms That