For the Same Amount of Pollution Emitted, an Emissions Tax

question 35

Multiple Choice

For the same amount of pollution emitted, an emissions tax is said to be more efficient than an environmental standard because all polluters:

• A) emit pollution up to the point at which the marginal benefit of polluting is equal to the emissions tax.
• B) emit the same amount of pollution, regardless of the marginal benefit of polluting.
• C) pay the same total tax bill for their pollution.
• D) reduce pollution emissions to zero.

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Definitions:

Investment Portfolio

A collection of assets including stocks, bonds, mutual funds, and other investments held by an individual or an institution.

Recognize

In an accounting context, to recognize is to formally record an item within the financial statements of an entity, acknowledging its existence or occurrence.

Short-term Capital Loss

A loss realized from the sale or exchange of a capital asset held for one year or less, which can be used to offset capital gains for tax purposes.

Long-term Capital Gain

A profit from the sale of an asset held for more than a year, typically taxed at a lower rate than regular income.