A Potential Disadvantage of Emissions Taxes Versus Direct Pollution Controls

Multiple Choice

A potential disadvantage of emissions taxes versus direct pollution controls is that

A) emissions taxes do not specify how the pollution is to be controlled,which leads to economic inefficiency in the implementation of the pollution restraint.
B) pollution becomes a part of each firm's profit-maximizing calculations,encouraging firms to find more efficient ways to pollute.
C) the authorities might have a better idea of the socially optimal level of pollution than of the optimal tax rate that would achieve it.
D) emissions taxes introduce distortions to the price system,whereas direct controls do not.
E) emissions taxes are more expensive to administer.