Which of the following require firms to pay to pollute?(i)corrective taxes(ii)tradable pollution permits(iii)pollution regulations aboth (ii) and (iii) bboth (i) and (ii) c(iii) only d(i) only
Question
Which of the following require firms to pay to pollute?(i)corrective taxes(ii)tradable pollution permits(iii)pollution regulations aboth (ii) and (iii) bboth (i) and (ii) c(iii) only d(i) only
Solution
The correct answer is b) both (i) and (ii).
Here's why:
(i) Corrective taxes: These are also known as Pigovian taxes. They are levied on firms that pollute and are intended to correct an undesirable or inefficient market outcome (a market failure). In this case, firms have to pay to pollute, which gives them an economic incentive to reduce pollution.
(ii) Tradable pollution permits: These are permits that allow firms a certain level of pollution. Firms that pollute less can sell their extra permits to firms that pollute more. This creates a market for pollution permits and firms end up paying to pollute more than their permits allow.
(iii) Pollution regulations: These are rules and standards that limit the amount of pollution that firms can produce. They do not necessarily require firms to pay to pollute, but rather impose fines or penalties if firms exceed the set limits. Therefore, they do not fit the criteria.
Similar Questions
Which one of the following policies to control pollution is the most common in the United States?Group of answer choicespublic utility commissionsemission permitseco-taxescommand and control regulation
Which of the following does not reward emissions reduction?Regulations.Taxes.Subsidies.Tradable permits.
Which of the following statements is not correct?Group of answer choicesCorrective taxes require the government to set a target level of pollution.Corrective taxes provide incentives to develop cleaner technologies.Corrective taxes allocate pollution to those producers who face the highest cost of reducing pollution.Corrective taxes can be used to place a price on the right to pollute.
Which of the following statements is not correct? aCorrective taxes allocate pollution to those producers who face the highest cost of reducing pollution. bCorrective taxes provide incentives to develop cleaner technologies. cCorrective taxes can be used to place a price on the right to pollute. dCorrective taxes require the government to set a target level of pollution.
Imposing taxes that increase as a firm's pollution increases is often recommended by economists as a means to reduce pollution. The reason for this recommendation is that such taxes would likely aeliminate pollution completely bencourage firms to use the most efficient method to reduce pollution cbe paid out of firm's profits and not paid for by higher consumer prices dencourage firms to increase production
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