In Some Cases, Tradable Pollution Permits May Be Better Than

question 109

Multiple Choice

In some cases, tradable pollution permits may be better than a corrective tax because

• A)pollution permits allow for a market solution while a corrective tax does not.
• B)corrective taxes distort incentives.
• C)pollution permits generate more revenue for the government than a corrective tax.
• D)it is hard to estimate the market demand curve and thus charge the right corrective tax.

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Definitions:

Income Statement

A financial document that shows a company's revenues, expenses, and net income over a specific period.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.

Dividends

Payments made by a corporation to its shareholder members, distributing profits.

Revised Model Business Corporation Act

An influential model law that suggests legal standards and practices for the formation, operation, and dissolution of corporations in the United States.