A broad-based carbon tax may be preferred to a targeted carbon tax because:
A)it will raise more revenue for the government
B)it is more like a tradeable permit system, which works better for reducing pollution externalities
C)it leaves it to the market to determine where the economy can most efficiently reduce its emissions
D)it gives a smaller incentive to companies to reduce their emissions

Question

Quizplus · Accepted Answer

A broad-based carbon tax allows the market to determine where emissions reductions can be made most efficiently. This provides flexibility and opportunities for cost-effective emissions reductions. Targeted carbon taxes may not have the same effect and may create distortions in the market. Additionally, a broad-based carbon tax could still generate significant revenue for the government without targeting specific sectors or companies.

A Broad-Based Carbon Tax May Be Preferred to a Targeted