An Emissions Tax Can Bring About an Efficient Solution to the Pollution

question 21

Multiple Choice

An emissions tax can bring about an efficient solution to the pollution problem because it:

• A) forces firms to bear the full cost of the tax.
• B) forces both firms and households to bear the full cost of their decisions.
• C) eliminates the external cost associated with pollution.
• D) allows government agencies to use benefit-cost analysis to determine the efficient level of pollution.

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Definitions:

365-Day Year

A 365-day year is a calendar method used in finance that assumes all years have 365 days for the calculation of interest rates.

Exact Simple Interest

Exact simple interest is a calculation method where interest accrues on a principal sum at a constant rate over a specific time period, using a 365-day year for calculations.

365-Day Year

A method used in finance that assumes a year consisting of 365 days for calculating interest, ignoring leap years.

Exact Simple Interest

Interest calculated on the initial principal of a loan or deposit, based on a precise calculation method rather than the common approximation methods.