A Corrective Tax Equal to the External Cost Imposed on Third

question 143

Multiple Choice

A corrective tax equal to the external cost imposed on third parties levied on polluters will:

• A)​eliminate all pollution.
• B)​increase the level of pollution.
• C)​force polluters to internalize the external cost resulting from their actions.
• D)​usually have no impact whatsoever on pollution levels, but will generate tax revenue for the government.

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Definitions:

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