Which of the following is not true of a pollution tax? A. It decreases the total amount of air pollution. B. It causes consumers to buy less of the polluting good. C. It is shifted backward to producers and results in less production of the polluting good. D. It causes firms to switch to cleaner technology.
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The purpose of this tax is to internalize the external costs of pollution and incentivize firms to reduce their pollution levels. A. It decreases the total amount of air pollution. This statement is true. By imposing a tax on pollution, firms are encouraged to Show more…
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