Pollution control policies such as effluent fees
A) lower consumer prices.
B) raise the sales of those firms being taxed.
C) cause the social costs to exceed the private costs.
D) increase the external diseconomies of production.
E) increase firms' costs of production.

Question

Quizplus · Accepted Answer

Effluent fees, as a form of pollution control policy, require firms to pay for the pollution they release into the environment. This increases their costs of production, as they must invest in pollution control technology or pay the fees. Therefore, the correct answer is E - pollution control policies such as effluent fees increase firms' costs of production.

Pollution Control Policies Such as Effluent Fees