A tax on virgin materials would lead firms to increase their recycling ratios.

Question

Quizplus · Accepted Answer

If there is a tax imposed on the use of virgin materials, it would increase their price and make the use of recycled materials comparatively cheaper. This would incentivize firms to increase their recycling ratios to avoid the tax and reduce their costs. Therefore, a tax on virgin materials would lead firms to increase their recycling ratios.

A Tax on Virgin Materials Would Lead Firms to Increase