-If a pollution tax in a market with an external cost changes the market so that it produces the efficient level of output, which of the following occurs? i. The supply curve shifts leftward.
Ii) The price increases.
Iii) The quantity produced decreases.
A) i only
B) ii only
C) iii only
D) i and ii
E) i, ii and iii

Question

-If a pollution tax in a market with an external cost changes the market so that it produces the efficient level of output, which of the following occurs? i. The supply curve shifts leftward.
Ii) The price increases.
Iii) The quantity produced decreases.
A) i only 
B) ii only 
C) iii only 
D) i and ii 
E) i, ii and iii

Quizplus · Accepted Answer

When a pollution tax is implemented in a market with an external cost, it effectively increases the cost of production for firms, leading to a leftward shift in the supply curve (i). This shift results in a higher equilibrium price (ii) and a decrease in the quantity produced (iii), moving the market towards a more efficient level of output that accounts for the external cost of pollution.

-If a Pollution Tax in a Market with an External