An advantage of pollution taxes that is NOT offered by command-and-control policies is that:
A. with a pollution tax, zero pollution is produced.
B. a pollution tax decreases the price of the polluting good.
C. with a pollution tax, firms have flexibility in their choice of strategies to use to clean up pollution.
D. a pollution tax decreases the demands for goods that cause pollution.
Answer: C
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An example of adverse selection is a. purchasing a new car sight unseen based on the recommendation of a neighbor. b. high health-insurance premiums resulting from the poor health of people who buy policies
c. suppliers who charge more for better quality clothing than for lower quality clothing. d. being talked into buying a low-quality item because the price is lower.
Which of the following statements is true in the context of the long run?
a. All the factors of production are fixed. b. No new firms enter the market. c. The producer can vary all the factors of production. d. The firms earn positive economic profit. e. Large firms tend to acquire market power.
Economies of scale imply: (i) a continuously falling AC curve; (ii) a larger output is more efficient than a smaller output
a. i and ii b. i but not ii c. ii but not i d. neither i nor ii
If we observe that every increase in income of $120 million generates an increase in consumption of $80 million, then the simple multiplier is
A. 2/3. B. 3/2. C. 2 D. 3 E. 8