According to the text, if a policy is designed to move a production process toward efficiency when pollution exists, the best tax is a
A)Lump sum tax on pollution
B)Progressive income tax
C)Proportional income tax
D)Sales tax

Question

Quizplus · Accepted Answer

A lump sum tax on pollution would directly address the issue of pollution and incentivize firms to find ways to reduce pollution in order to reduce their tax burden. A progressive or proportional income tax or a sales tax would not specifically target pollution and may not provide enough incentive for firms to reduce their pollution output.

According to the Text, If a Policy Is Designed to Move