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Why the imposition of pollution tax of more than the actual value of the damage is unfair.
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Explanation of Solution
When firms in the industry that pollute are charged with tax rates of higher value than the actual pollution value caused by the firm, the firm would increase the
When the penalty is equal to the marginal damage cost incurred by the polluting firm, the price paid by the consumers for the product would increase. The increase in the price of the commodity of the polluting firm would take place up to the point where the price equals the marginal
Pollution tax: Pollution tax is a measure adopted by the government to control the pollution by the firms through charging a tax rate for each unit of pollution generated by the firm.
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Chapter 16 Solutions
Principles Of Microeconomics
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