1.The private cost of production includes the amount a firm pays for , , and . 2.The external cost of production is the cost incurred by . 3.The social cost of production equals the cost...

1.The private cost of production includes the amount a firm pays for


,

, and

.

2.The external cost of production is the cost incurred by


.

3.The social cost of production equals the cost plus the cost

.

4.A pollution tax will decrease the amount of pollution a firm generates if the tax exceeds the of

abatement.

5. A pollution tax decreases the volume of pollution in two ways, by decreasing


and decreasing


.