Author Question: A tax on firms for polluting will be most effective in reducing pollution at low cost if the tax ... (Read 34 times)

craiczarry · **on:** Jun 29, 2018

A tax on firms for polluting will be most effective in reducing pollution at low cost if the tax

A) is levied on a one-time, lump-sum basis.
B) per unit of pollutant is constant.
C) per unit of pollutant is lower for low polluting firms.
D) per unit of pollutant is proportioned to profits or ability to pay.

Question 2

When a tax on emissions into the air accurately reflects the cost to all members of society of an additional unit of the emissions, it

A) amounts to no more than a license to pollute.
B) encourages firms to reduce emissions as long as the cost of doing so is less than the cost of continuing the emissions.
C) gives firms little incentive to search for less-polluting production processes.
D) will not prevent large and profitable firms from polluting.