Which of the Following Is a Difference Between Corrective Taxes

question 145

Multiple Choice

Which of the following is a difference between corrective taxes and tradable pollution permits?

• A)Corrective taxes are a market-based solution while tradable pollution permits are a command-and-control policy.
• B)With a corrective tax the government sets the price of pollution; with tradable pollution permits, demand and supply set the price of pollution.
• C)With corrective taxes firms pay for pollution; with tradable pollution permits firms do not.
• D)Corrective taxes internalize the pollution externality while tradable pollution permits do not.

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Definitions:

Estate

The total of all the property, assets, and debts left by an individual at death, or the property entrusted to an individual during their lifetime.

Trust

(1) A business arrangement in which stock owners appoint beneficiaries and place their securities with a trustee, who manages the company and pays a share of the earnings to the stockholders. (2) An estate-planning arrangement whereby a person transfers property to another person and the property is used for the benefit of a third person.

Transfer Property

The act of legally changing ownership of property or assets from one party to another.

Allocation

The process of distributing resources or assigning tasks among people or projects based on a plan or a set of criteria.