An Emissions Tax (Imposed on Each Unit of Pollution Produced)

question 85

Multiple Choice

An emissions tax (imposed on each unit of pollution produced) that is set too high to achieve allocative efficiency will cause

• A) new firms to enter the industry.
• B) too few resources to be devoted to pollution abatement and too much of the product to be produced.
• C) too many resources to be devoted to pollution abatement and too little of the product to be produced.
• D) no change in the polluting firm's behaviour.
• E) too few resources to be devoted to pollution abatement and too little of the product to be produced.

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