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

Question

1. A volume-based effluent fee is based on the degree of harm linked to the contaminant released.
2. Polluting sources have an incentive to abate up to the point where their Marginal Abatement Cost (MAC) equals the Marginal Effluent Fee (MEF), and to pay the fee beyond that point.
3. When polluting sources with different Marginal Abatement Costs (MACs) are faced with a Marginal Effluent Fee (MEF), eachabates at a different level, which means that the effluent fee does not achieve a cost-effective solution.
4. A fertilizer tax is an example of an effluent fee.
5. Tradeable effluent permit markets can lead to cost savings as long as polluting sources face different marginal abatement costs to control the same pollutant.

Answer 1

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