An Optimal Corrective Tax Levied on Polluters Will

question 51

Multiple Choice

An optimal corrective tax levied on polluters will:

• A) be equal to the marginal cost of their actions imposed on third parties.
• B) not generate enough revenue to pay for the cost of the damage resulting from pollution that occurs at the efficient output of the good.
• C) decrease pollution to zero.
• D) increase the supply of polluting goods.

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