A pollution charge gives the trucking industry an incentive to reduce its emissions, as long as the of reducing the emissions is _______.

Question

Quizplus · Accepted Answer

The correct answer is C) marginal cost; less than the tax. This is because a pollution charge (or tax) incentivizes firms to reduce emissions if the cost of reducing an additional unit of emissions (marginal cost) is lower than the tax for emitting. This way, firms can save money by reducing emissions rather than paying the tax.

A Pollution Charge Gives the Trucking Industry an Incentive to Reduce