Taxes are a more effective method of controlling pollution than are environmental standards because:
A)standards allow greater flexibility.
B)standards require less information.
C)standards never require the efficient level of output.
D)taxes encourage reducing pollution at the lowest possible cost.

Question

Quizplus · Accepted Answer

Taxes create a financial incentive for firms to reduce pollution at the least cost-effective level, whereas environmental standards create a set of rules that can restrict output even beyond the most cost-effective level. This makes taxes a more effective method to control pollution than environmental standards.

Taxes Are a More Effective Method of Controlling Pollution Than