A charge that is equal to the external cost caused by pollution is a(n):

Question

Quizplus · Accepted Answer

An emissions tax is a tax imposed on the amount of pollution that a firm releases into the environment. It creates an incentive for firms to reduce their pollution output to avoid paying the tax. By setting the tax equal to the external cost caused by the pollution, firms will have to pay for the harm they cause and internalize the environmental costs. This leads to a more efficient allocation of resources and a reduction in pollution levels.

A Charge That Is Equal to the External Cost Caused