A tax on pollution would:
A)increase the quantity of pollution generated by giving firms the right to pollute.
B)result in firms polluting the same amount as before the imposition of a tax.
C)decrease the quantity of pollution generated.
D)have an indeterminate impact on pollution levels.

Question

A tax on pollution would:
A)​increase the quantity of pollution generated by giving firms the right to pollute.
B)​result in firms polluting the same amount as before the imposition of a tax.
C)​decrease the quantity of pollution generated.
D)​have an indeterminate impact on pollution levels.

Quizplus · Accepted Answer

A tax on pollution increases the cost of production for firms who pollute, making it less attractive to pollute. Therefore, firms may invest in cleaner technology or reduce pollution to avoid the tax. This would result in a decrease in the quantity of pollution generated.

A Tax on Pollution Would