A pollution tax
A)is itself a form of negative externality
B)is a positive externality used to offset a negative one
C)is a price per unit of discharge of pollution
D)is a tax on pollution control equipment
E)may cause a common pool problem

Question

Quizplus · Accepted Answer

A pollution tax is a tax levied on the discharge of pollutants into the environment. It is a price per unit of pollution discharged. The purpose of the tax is for firms to directly take into account the external costs they are imposing on society and adjust their behavior accordingly. This can help reduce pollution and improve overall social welfare.

A Pollution Tax