If the government were to impose a fee of $10 000 for each unit of air pollution released by a steel mill, this policy would be considered a:
A) subsidy
B) regulation
C) Pigovian tax
D) command-and-control policy

Question

Quizplus · Accepted Answer

The policy described is a Pigovian tax, which is a tax on a negative externality (in this case, air pollution) intended to internalize the cost of the externality and incentivize firms to reduce their pollution levels.

If the Government Were to Impose a Fee of $10