The Use of Emissions Taxes as a Method of Reducing

Multiple Choice

The use of emissions taxes as a method of reducing pollution
1) is more efficient than direct controls;
2) allows firms to select the most efficient abatement techniques;
3) forces firms to internalize the pollution externality.

A) 1 only
B) 1 and 2 only
C) 1 and 3 only
D) 2 and 3 only
E) 1,2,and 3