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The government auctions off 500 units of pollution rights. They sell for $50 per unit, raising total revenue of $25,000. This policy is equivalent to a corrective tax of ___________ per unit of pollution. a. $10 b. $50 c. $450 d. $500

Chapter 10, Problem 5

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QUESTION:

The government auctions off 500 units of pollution rights. They sell for $50 per unit, raising total revenue of $25,000. This policy is equivalent to a corrective tax of ___________ per unit of pollution.

a. $10

b. $50

c. $450

d. $500

Questions & Answers

QUESTION:

The government auctions off 500 units of pollution rights. They sell for $50 per unit, raising total revenue of $25,000. This policy is equivalent to a corrective tax of ___________ per unit of pollution.

a. $10

b. $50

c. $450

d. $500

ANSWER:

Step 1 of 2

Given data:

The government auctions off 500 units of pollution rights. They sell for $50 per unit, raising total revenue of $25,000. Governments across the world use a variety of policy instruments to regulate negative externalities. The most important negative externality that has been witnessed around the world is pollution.

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