Total surplus of the society and the
Answer to Problem 7MCQ
From the available options, the correct option increases or decreases.
Explanation of Solution
According to the graph, when a Pigouvian tax equal to the marginal external cost is imposed, then society’s total surplus will increase because the Pigouvian tax creates a negative externality which increases the
Here, the correct option is b (increase decrease).
Introduction: Total surplus of society involves the surplus of the
Chapter 14R Solutions
Krugman's Economics For The Ap® Course
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