Question

Which of the following statements regarding price-based and quantity-based policies is correct?

Select one answer: (please give an explanation for each one)

a) Banning lead in petrol is a price-based policy.

b) A tax on carbon is a quantity-based policy.

c) An advantage of quantity-based policies is that the implementation can be rapid and complete.

d) Quantity-based policies require more information to implement than price-based policies.

Answer 1

a) Banning lead in petrol is a price-based policy: FALSE (It is a quantity based policy)

b) A tax on carbon is a quantity-based policy: FALSE (It is a price based policy)

c) An advantage of quantity-based policies is that the implementation can be rapid and complete: TRUE (Quantity based policies are easier and more rapid to implement as they do not involve price regulation or tax collection)

d) Quantity-based policies require more information to implement than price-based policies: FALSE (Both the policies need extensive information to be implemented)