Question

All of the following statements about emission charges are correct except

A) the more pollution a firm creates, the more it pays in emission charges.

B) emission charges are frequently used in North America.

C) the government sets a price per unit of pollution.

D) to work out the emission charge that achieves efficiency, the government needs a lot of information about the polluting industry that is rarely available.

E) emission charges are frequently used in Europe.

Answer 1

A pollution charge is a tax imposed on the quantity of pollution emitted by a firm. While most statements about emission charges are correct, statement D is incorrect as the government can obtain necessary information through industry surveys and data collection.

Step-by-step explanation:

A pollution charge is a tax imposed on the quantity of pollution that a firm emits. It gives a profit-maximizing firm an incentive to determine ways to reduce its emissions, as long as the cost of reducing emissions is lower than the tax. Statements A, B, C, and E are all correct. However, statement D is incorrect. The government does need information about the polluting industry to determine the emission charge that achieves efficiency, but this information is often available through industry surveys, data collection, and monitoring.