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Two options are being considered to encourage a reduction in emissions: (1) pay polluters $250 for each unit of emissions abated or (2) charge a tax of $250 on each unit emitted. Which of the following statements are true?
a. The payment would provide a greater incentive to reduce emissions than would the tax. b. The tax would provide a greater incentive to reduce emissions than would the payment. c. Rational polluters would reduce their emissions by the same amount under either policy. d. The payment may increase total emissions in the industry.
Sagot :
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