A pollution charge is a form of tax imposed on:

• A. firms or individuals that generate pollution
• B. consumers who purchase environmentally friendly products
• C. government agencies responsible for environmental regulation
• D. workers employed in polluting industries

Answer: (A)

Verified step by step guidance

1. Understand the concept of a pollution charge: it is a tax designed to internalize the external cost of pollution, meaning it makes the polluters pay for the negative effects their actions impose on society.
2. Identify who generates pollution: typically, these are firms or individuals whose activities release pollutants into the environment.
3. Recognize that the purpose of the pollution charge is to create an economic incentive for polluters to reduce their emissions by increasing their costs.
4. Eliminate options that do not align with this purpose: consumers of environmentally friendly products, government agencies, and workers are not the direct sources of pollution targeted by this tax.
5. Conclude that the pollution charge is imposed on firms or individuals that generate pollution, as they are the ones responsible for the externality the tax aims to correct.