Pollution reduction policies are likely to lead to:
A)higher product prices.
B)lower product prices.
C)unchanged product prices.
D)indeterminate changes in product prices.

Question

Pollution reduction policies are likely to lead to:
A)​higher product prices.
B)​lower product prices.
C)​unchanged product prices.
D)​indeterminate changes in product prices.

Quizplus · Accepted Answer

Pollution reduction policies such as taxes or regulations impose additional costs on businesses, which are likely to be passed on to consumers in the form of higher product prices. The cost of compliance, such as investing in cleaner technology or paying for emissions permits, will increase production costs, and the firm will reflect these added costs in the final price for the protected product. Therefore, implementing pollution reduction policies can increase the price of goods and services for consumers, making them pay for the negative externalities of pollution.

Pollution Reduction Policies Are Likely to Lead To