Figure 16.1A firm that generates pollution is illustrated in Figure 16.1. Suppose the government is considering changing the pollution tax from P3 to P2. That new policy would:
A. increase the marginal benefit to firms of abating, and thus encourage greater abatement.
B. increase the marginal benefit to firms of abating, causing them to generate more pollution.
C. reduce the marginal benefit to firms of abating, causing them to generate more pollution.
D. reduce the marginal benefit to firms of abating, and thus encourage greater abatement.
Answer: C
You might also like to view...
Briefly describe the factors that contributed to the U.S. Current Account deficits of the 1990s
What will be an ideal response?
When cross-sections of Americans are asked what the main problem they are dealing with is, the majority will say they don't have:
a. Nearly enough time b. A big enough house c. Enough money d. Meaningful relationships
Advertising intended to induce a consumer to discover a previously unknown taste or preference is
A) persuasive advertising. B) informational advertising. C) direct advertising. D) mass marketing advertising.
In the case of positive externalities, social benefits are __________ internal benefits.
A. less than B. equal to C. sometimes greater and sometimes less than D. greater than