If the government taxes an industry that creates pollution,the tax
i.decreases the pollution.
ii.increases the price of the product produced by the firms.
iii.decreases the quantity of the good produced.
A) i only.
B) ii only.
C) ii and iii.
D) i and iii.
E) i, ii, and iii.

Question

Quizplus · Accepted Answer

Taxing an industry that creates pollution incentivizes firms to reduce pollution to lower their tax burden (i), likely leads to higher production costs that are often passed on to consumers in the form of higher prices (ii), and may reduce production as it becomes more costly, leading to a decrease in the quantity of the good produced (iii).

If the Government Taxes an Industry That Creates Pollution,the Tax