Firms are likely to prefer a pollution tax to a command-and-control policy because the command-and-control policy will
A) increase the costs of production more than a pollution tax.
B) result in the price of the good rising more than under a pollution tax.
C) result in consumers buying less of the good than under a pollution tax.
D) all of the above

Question

Quizplus · Accepted Answer

A command-and-control policy typically mandates specific limits or technologies that firms must use to control pollution, which can be more costly and less flexible than a pollution tax. A pollution tax allows firms to choose the most cost-effective way to reduce emissions, potentially leading to lower costs of production, smaller price increases, and less impact on consumer purchasing behavior compared to command-and-control policies.

Firms Are Likely to Prefer a Pollution Tax to a Command-And-Control