The imposition of a per-unit tax on polluting firms will result in the socially efficient level of production only if the tax equals:

Name: The imposition of a per-unit tax on polluting firms will result in the socially efficient level of production only if the tax equals:
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Question

Quizplus · Accepted Answer

The tax should equal the marginal external cost, which is the difference between the marginal social cost and the marginal private cost, to internalize the externality and achieve the socially efficient level of production.

The Imposition of a Per-Unit Tax on Polluting Firms Will