When a tax on output is imposed to internalize 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 internalize the external costs of pollution, the supply curve shifts down by the amount of the tax.
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When a tax is imposed to internalize external costs, the supply curve shifts upward (or to the left) by the amount of the tax, reflecting the increased cost of production.

When a Tax on Output Is Imposed to Internalize the External