Pollution taxes are intended to
A)reduce the budget deficit.
B)incentivize firms to cut their pollution.
C)reduce welfare of polluting firms.
D)raise deadweight loss.

Question

Quizplus · Accepted Answer

Pollution taxes are designed to increase the cost of polluting activities, providing firms with an incentive to reduce their pollution output. This helps to internalize the negative externalities associated with pollution and can lead to a more socially optimal level of output. The other options listed (A, C, and D) are not primary functions of pollution taxes.

Pollution Taxes Are Intended to