A Tax on Firms That Emit Pollutants Equal to the External

A tax on firms that emit pollutants equal to the external cost would:

A) provide firms with an incentive to increase the level of the activity that creates pollution.
B) provide firms with an incentive to decrease the level of the activity that creates pollution.
C) provide firms with little incentive to search for production methods that are less environmentally damaging.
D) not reduce pollution levels at all.
E) reduce pollution levels to zero.