A subsidy for pollution not produced can induce producers to pollute at the efficient level.
A) True
B) False
C) Uncertain

Question

Quizplus · Accepted Answer

Subsidies for reducing pollution incentivize producers to lower their pollution levels, potentially aligning their production practices with the socially efficient level of pollution, where the marginal social cost of pollution equals the marginal benefit of reducing it.

A Subsidy for Pollution Not Produced Can Induce Producers to Pollute