A carbon tax cuts pollution without micromanaging companies. It increases costs per ton emitted, pushing firms towards cleaner options, all under a simple pricing system. Less regulation, cleaner future.
The correct answer is: it reduces pollution with fewer rules and regulations polluting companies.
Here's why:
Trading credits: While carbon taxes allow emitters to trade carbon credits if they stay under their limit, this doesn't inherently reduce pollution itself. It just offers flexibility within the same amount of emissions.
Measuring emissions: The cap and the process of measuring carbon emissions are aspects of certain cap-and-trade systems, not specific to carbon taxes. They don't directly provide an advantage in terms of reduced pollution.
Reduced amounts entering the atmosphere: This is the ultimate goal of a carbon tax, but it's not the advantage itself.
A carbon tax aims to discourage carbon-intensive activities by making them more expensive. This incentivizes companies to shift towards cleaner options naturally, without the need for specific regulations for each step. This makes it a potentially more efficient and less intrusive way to reduce pollution.
Therefore, the advantage of a carbon tax highlighted in the multiple choice question is that it reduces pollution with fewer rules and regulations for polluting companies.