Question

Pollution taxes reduce pollution by a. decreasing the amount sold of the good that causes the pollution. b. causing firms to produce less of the good that generates the pollution. c. encouraging firms to modify their production process to reduce emissions. d. All of these

Answer 1

C. Encouraging firms to modify their production process to reduce emissions.

Step-by-step explanation:

Pollution taxes are a way of encouraging companies to develop different ways of producing in order to reduce their impact on the Planet. Taxes in this case work as a kind of punishment: if a company continues to prioritize their production and their growth instead of getting involved in solving the pollution problem, they will have to pay for it. Pollution taxes don’t have the aim of making companies produce less or sell less as this would be harmful to the economy. The idea is to change the companies mindset and try to think differently and invest money and energy to find ways of producing without being so harmful to the environment.