Pollution Tax and Subsidies — Prelims Questions

Which of the following statements regarding Pigouvian taxes in environmental economics is/are correct? 1. They are levied on activities generating positive externalities. 2. The optimal tax rate is equal to the marginal external cost of pollution. 3. They aim to internalize external costs and achieve allocative efficiency. Select the correct answer using the code given below:

With reference to environmental fiscal instruments in India, consider the following statements: 1. The Clean Environment Cess on coal was subsumed under the GST Compensation Cess. 2. Article 48A of the Constitution mandates citizens to protect and improve the natural environment. 3. The National Green Tribunal (NGT) can impose 'environmental compensation' on polluters. Which of the statements given above is/are correct?

Which of the following is NOT a typical challenge in implementing pollution taxes in India?

Consider the following statements regarding environmental subsidies: 1. They aim to internalize positive externalities. 2. The FAME India scheme for electric vehicles is an example of an environmental subsidy. 3. They can lead to fiscal burden and market distortions if not well-designed. Which of the statements given above is/are correct?

In the context of environmental policy, what is the primary advantage of market-based instruments (MBIs) like pollution taxes over command-and-control (CAC) regulations?