Which of the following is NOT an advantage of a pollution tax?
A)It allows firms to equate its marginal abatement cost and the marginal benefit tax savings).
B)It allows a low-cost firm to abate more.
C)It provides firms an incentive to invest in pollution abatement technologies.
D)It allows us to predict the total volume of pollution that will be discharged.

Question

Quizplus · Accepted Answer

A pollution tax does not allow us to predict the total volume of pollution that will be discharged, as it only sets a price on pollution, leaving the quantity of pollution reduction to be determined by the firms' responses to the tax.

Which of the Following Is NOT an Advantage of a Pollution