Under an Optimal Tax System,polluting Producers Have the Incentive to Reduce

question 53

Multiple Choice

Under an optimal tax system,polluting producers have the incentive to reduce pollution up to the point at which the cost of the reduction is:

• A) twice the tax imposed.
• B) equal to the tax imposed.
• C) equal to the total benefit of the reduction.
• D) twice the total benefit of the reduction.

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