Question

When the benefits and costs of pollution reduction are known with certainty, which regulatory instrument will result in the efficient amount of pollution abatement? Select one:

a. A tax
b. They will both end up at the same level of pollution abatement
c. Neither will result in the efficient amount of pollution abatement
d. A cap

Answer 1

Answer: A tax

Step-by-step explanation: In simple words, pollution abatement refers to the process in which the govt or other such authority tries to control or reduce the level of pollution.

When the benefits and costs of pollution reduction are certain, one can impose tax on sectors which are the main source of pollution. Although tax must be imposed in a way that the cost of pollution reduction will be less than the tax rate.