A pollution tax
A) decreases the price of the good taxed.
B) increases the price of the good taxed.
C) does not affect the quantity demanded of the good taxed.
D) does not affect the price of the good taxed.

Question

Quizplus · Accepted Answer

A pollution tax is a form of tax imposed on the undesired or polluting activities by businesses or individuals. It increases the cost of production, which leads to an increase in the price of the good or service. The higher price encourages consumers to reduce their demand for the product, resulting in a decrease in the quantity demanded. Therefore, a pollution tax increases the price of the good taxed.

A Pollution Tax