Answer the following statement(s) true (T) or false (F)

1. The major categories of market instruments are: pollution charges, deposit/refund systems, subsidies, and pollution permit trading systems.
2. A payment or tax concession aimed at lowering the cost of abating is called a pollution charge.
3. Because polluters ignore the MEC of environmental damage linked to the production of a good, too few resources are allocated to producing that good.
4. A pollution charge follows the “polluter-pays principle.”
5. If production of a good generates an environmental negative externality, the effect of that externality is captured by the MEC of production.


1. True
2. False
3. False
4. True
5. True

Economics

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