5. Corrective taxes and tradable pollution permits Aa Aa Suppose a political can
ID: 1102733 • Letter: 5
Question
5. Corrective taxes and tradable pollution permits Aa Aa Suppose a political candidate criticizes a government pollution permit policy that she says lets corporations buy and sell the right to pollute. She argues that our right to breathe and the future of our planet require real regulation instead of this type of government policy Which of the following describes why most economists would disagree with her statement? Clean air is a fundamental right, and government regulation will allow too much pollution. O T O A free market O A corrective (Pigovian) tax would result in a more efficient outcome than would either tradable permits or he environment is so important that it should be protected as much as possible, regardless of the cost. in tradable pollution permits is typically more efficient than government regulation government regulation.Explanation / Answer
Answer:
5.
A free market in tradable pollution permits is typically more efficient than government regulation.
Explanation:
The political candidate's argument disputes with standard economic idea because tradable pollution permits are a economy based policy that efficiently alot the right to pollute. While government regulation of pollution can result in the same amount of pollution as a tradable pollution permits.
3.
Tradable permits:
Tradable permits is a three stage procedure that allows to decrease pollution emissions.
when the government knows the optimal quantity of pollution, they can also use tradable permits, which are a direct means of controlling the total quantity of pollution emitted.
corrective taxes:
A corrective tax is a market based policy alternative used by the government to point out negative consequences.
based on circumstances, corrective taxes and tradable permits can be equally selective at reducing pollution.
The government can achieve the socially optimal quantity of pollution by setting a corrective tax equal to the price the Firm is willing to pay to pollute at the optimal quantity. This leads producers to internalize the cost so that they will generate pollution only up to the point where their marginal benefit is equal to their marginal private cost plus the marginal cost to society.
For the above scenario it should use corrective taxes to achieve the socially optimal quantity of pollution.
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