Suppose cars are taxed according to the amount of pollution they emit per gallon of gasoline consumed. We would expect to observe all of the following EXCEPT

Question

Quizplus · Accepted Answer

Taxing cars based on the amount of pollution they emit per gallon of gasoline consumed would likely lead to an increase in the production and consumption of less-polluting and more fuel-efficient cars, as well as an increase in the production of less-polluting vehicles. However, it is unlikely that this policy would lead to an increase in the miles driven since the tax incentivizes consumers to choose cars that emit less pollution, and those cars are more likely to be fuel-efficient and therefore cheaper to operate.

Suppose Cars Are Taxed According to the Amount of Pollution