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Suppose the government imposes a tax for each unit of pollution that a firm produces. The firm will

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Suppose the government imposes a tax for each unit of pollution that a firm produces. The firm will

Suppose the government imposes a tax for each unit of pollution that a firm produces. The firm will

▸ ignore the tax and continue to produce the same amount of output.

▸ reduce emissions until the marginal cost of any further reduction in pollution is equal to or greater than the tax.

▸ increase output such that the additional revenue can offset this additional tax payment.

▸ reduce emissions until the marginal cost of any further reduction in pollution is equal to the price of the firm's product.

▸ stop producing altogether.

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Microeconomics

Edition: 17^th

Author: Ragan

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nsdq007 Author

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Thanks for your help!!

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You make an excellent tutor!

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