What does a corrective tax do
A)It places a price on the right to pollute.
B)It assigns a legal pollution limit for firms.
C)It causes each factory to reduce pollution by the same amount.
D)It causes a higher cost to society than pollution regulations.

Question

Quizplus · Accepted Answer

A corrective tax places a price on the right to pollute, which creates an economic incentive for firms to reduce their pollution emissions. The tax encourages firms to reduce their emissions to a level where it becomes less expensive to pay the tax than to continue polluting. This helps to internalize the external costs of pollution and promotes more efficient resource allocation.

What Does a Corrective Tax Do