Answered

In order to achieve an efficient result, a pollution tax must:

A. be equal to the social cost of production.
B. be shared equally by the producer and the consumer of the produced good.
C. not be passed through to the consumers of the produced good.
D. be equal to the external cost generated.



Answer :

GinnyAnswer

Final answer:

To achieve efficiency, a pollution tax must match the external cost, align with social production costs, and incentivize emissions reduction.


Explanation:

A pollution tax must be equal to the external cost generated to achieve an efficient result. By taxing pollution, firms face additional costs that align with the social cost of production, internalizing externalities. This tax incentivizes polluters to reduce emissions until the marginal costs of abatement equal the tax, promoting cost-effectiveness.


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