If policymakers use a pollution tax to control pollution, the tax ...

[sc00by25]

If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set
 
  A) equal to the marginal private cost of production at the economically efficient level of pollution.
  B) equal to the amount of the deadweight loss created in the absence of a pollution tax.
  C) at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product.
  D) equal to the marginal external cost at the economically efficient level of pollution.

Question 2

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except
 
  A) engage in mutually beneficial trade with other nations.
  B) produce a combination of goods that lies outside its own production possibilities frontier.
  C) consume a combination of goods that lies outside its own production possibilities frontier.
  D) increase the variety of products that it can consume with no increase in resources.

[samiel-sayed]

Answer to Question 1

D

Answer to Question 2

B