What is the economic rationale for imposing a pollution tax?
Answer and explanation
Correct answer: Including the social cost of pollution in the producer's decision
Pollution often creates costs for people and ecosystems that are absent from the producer’s private calculation. A pollution tax raises the cost of emitting and encourages firms to reduce emissions, adopt cleaner technology or change production methods. It does not necessarily stop all production. Therefore, A correctly describes internalising the social cost and correcting a negative externality.
Frequently asked questions
What is the correct answer to this question?
Including the social cost of pollution in the producer's decision
Why is this the correct answer?
Pollution often creates costs for people and ecosystems that are absent from the producer’s private calculation. A pollution tax raises the cost of emitting and encourages firms to reduce emissions, adopt cleaner technology or change production methods. It does not necessarily stop all production. Therefore, A correctly describes internalising the social cost and correcting a negative externality.
Which subject and chapter does this question cover?
This is a Class 11 Geography question. Chapter: Geography as a Discipline. Topic: Geography as an integrating discipline.
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