Which of the following statements is CORRECT?
A) An emissions tax is a more efficient way to reduce pollution than an environmental standard, because an emissions tax equalizes the marginal benefit of pollution from all sources.
B) An environmental standard is a more efficient way to reduce pollution than an emissions tax, because an environmental standard can be structured to equalize the reduction in pollution from all sources.
C) If an emissions tax and environmental standards lead to the same total reduction in pollution, then they will also lead to the same reduction in pollution by individual polluters.
D) It is easy to set emissions taxes at the "correct" level, since the relationship between emissions taxes and the reduction in emissions that they induce has been extensively studied and is well known.

Question

Quizplus · Accepted Answer

An emissions tax is considered more efficient because it provides a financial incentive for all polluters to reduce emissions until their marginal cost of reduction equals the tax, leading to an equalization of the marginal benefit of pollution reduction across all sources.

Which of the Following Statements Is CORRECT