Question
State whether each of the following statements is True or False. Carefully explain your answer. (c) Suppose the government decides to impose a per unit
State whether each of the following statements is True or False. Carefully explain your answer.
(c) "Suppose the government decides to impose a per unit tax on petrol consumption to compensate for the environmental damage that arises due to the CO2 emissions. Assume that the tax is chosen to exactly offset the external damage created by petrol consumption. This tax will, in general, increase the price of petrol paid by the consumers. The resulting market equilibrium cannot be efficient unless consumers are compensated for the price increase caused by the tax" (3 marks)
(d)"During a recession, some people who lose their jobs choose to drop out of the labour force completely, even though they would prefer to remain employed if the jobs were available. This makes the official unemployment rate statistic less reliable for understanding the dynamics of the labour market." (3 marks)
could you please show me the correct answers to these that would garner full marks. thank you.
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