When a tax on output is imposed to internalise the external costs of pollution, the supply curve shifts down by the amount of the tax.

Name: When a tax on output is imposed to internalise the external costs of pollution, the supply curve shifts down by the amount of the tax.
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When a tax on output is imposed to internalize the external costs of pollution, the supply curve shifts up (or leftward) by the amount of the tax, reflecting an increase in production costs.

When a Tax on Output Is Imposed to Internalise the External