An advantage of imposing a tax on the producer that generates pollution is that
A)it forces the polluting producer to internalise the external cost of the pollution.
B)the government can keep tabs on exactly what is produced in an industry.
C)it will eliminate pollution.
D)a producer can pass the cost of the pollution to consumers.

Question

Quizplus · Accepted Answer

Imposing a tax on the producer that generates pollution forces them to internalize the external cost of the pollution, meaning that they are paying for the negative effects their actions have on society (such as increased healthcare costs or environmental damage). This incentivizes them to reduce their pollution levels and encourages the development of cleaner technologies. However, it does not eliminate pollution entirely, nor does it allow the government to closely monitor production. While a producer could theoretically pass the cost of the pollution onto consumers, this would likely result in decreased demand for their product and negatively impact their profits.

An Advantage of Imposing a Tax on the Producer That