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    Exam 5: Externalities, Environmental Policy, and Public Goods
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    Assume That Production from an Electric Utility Caused Acid Rain
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Assume That Production from an Electric Utility Caused Acid Rain

Question 32

Question 32

Multiple Choice

Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of


A) a transaction cost.
B) a Pigovian tax.
C) a Pigovian subsidy.
D) the Coase Theorem.

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