Explain why taxes on pollutants reduce pollution while subsidies to firms cutting their pollutants actually increase pollution.
What will be an ideal response?
Taxes cause an increase in cost and a leftward shift of supply. Output decreases and there is less pollution. Subsidies cause individual firms to cut their emissions, but they also induce additional firms into the market. Since costs of production decrease, the new equilibrium output will increase.
You might also like to view...
The total amount of debt owed by the federal government is represented by the total value of the outstanding
A. U.S. government securities. B. bank loans and deposits. C. Federal Reserve notes. D. stocks and bonds.
When the opportunity cost of producing carrots increases as more carrots are produced, then
a. no more carrots will be produced b. resources are equally suited to the production of carrots and to other goods c. the production possibilities curve shifts inward d. the production possibilities curve shifts outward e. the law of increasing costs is in effect
From 1992 to 2012, many industries have increased in concentration.
Answer the following statement true (T) or false (F)
Nations with single payer systems typically have
A. higher tax rates than exist in the U.S. B. better access to high-tech medical solutions than in the U.S. C. serious inequality in the access to basic care. D. lower life expectancies than in the U.S.