Compared to Taxing Pollution, an Advantage of Auctioning Pollution Permits

question 154

Multiple Choice

Compared to taxing pollution, an advantage of auctioning pollution permits is that:

• A)the largest reductions in pollution are made by the firms that can do so the most cheaply.
• B)auctioning permits raises revenue for the government.
• C)it allows the public to directly reduce pollution by purchasing permits.
• D)it ensures that all firms reduce pollution by the same amount.

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Definitions:

Unit Cost

Unit cost is the total expenditure incurred to produce, store, and sell one unit of a product or service, including both fixed and variable costs.

U.S. Tax System

The structured collection of taxes imposed by the federal, state, and local governments in the United States, including income, sales, and property taxes.

Taxation Basis

Refers to the underlying system or set of rules used to determine how much tax an individual or entity owes.

Saving

The process of setting aside a portion of current income for future use, typically in a bank account or other investment vehicle.