Why Are Corrective Taxes Preferred Over Regulations to Deal with Pollution

question 88

Multiple Choice

Why are corrective taxes preferred over regulations to deal with pollution

• A)They reduce pollution at a lower cost to society than regulations.
• B)They raise revenue and reduce pollution simultaneously, although efficiency is reduced.
• C)They obtain faster results than regulations.
• D)They allow for an accurate monitoring of pollution levels.

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Definitions:

Productive Resources

Essential inputs used in the production of goods and services, including land, labor, capital, and entrepreneurship.

Present Value

Today’s value of some amount of money that is to be received sometime in the future.

User Cost

The opportunity cost of extracting and selling a nonrenewable natural resource today rather than waiting to extract and sell the resource in the future; the present value of the decline in future revenue that will occur because a nonrenewable natural resource is extracted and sold today rather than being extracted and sold in the future.

Market Price

The current price at which a good or service can be bought or sold in a marketplace.