The correct answer -
option E.
Let us follow a step by step approach to solve this.
Conclusion: the best way to achieve a reduction in air pollutant emissions in Country Y would be to institute fixed upper limits on them.
Logic: 1. Taxing is more economically efficient but policy makers strongly oppose new taxes (making it an unfeasible option)
Falsification Question: In what scenario will instituting fixed upper limits on air pollutant emissions not be the best way to achieve a reduction?
Falsification Conditions:1. What if there is a way that is even better? for example, some sort of incentivization for lesser emissions (tax benefits for lesser emissions, perhaps?). The economist assumes that forcing an upper limit is THE BEST way.
The underlying assumption here is that
there is no other way which is actually better2. What if the policy makers oppose upper limits as ferociously as they do for taxes?
Remember the logic - why does the economist believe taxation is not feasible. Because policy makers strongly oppose it. What will happen if the policy makers oppose upper limits the same way? Then can the economists still confidently say fixing upper limit is the best way? No
The underlying assumption is that
the policy makers in country Y will not give as strong an opposition to fixing upper limits, as they have done to damage-proportionate taxation. Option Choice Analysis(A) Policy makers in Country Y oppose all new taxes equally strongly, regardless of any benefits they may provide.
The conclusion is not about taxes, but about fixing upper limits on air pollutant emissions. Irrelevant
(B) Country Y's air pollutant emissions would not fall significantly if they were taxed in proportion to the damage they are likely to cause.
Again - is our argument for which we are trying to find the assumption, about how effective proportionate taxation will be? or is it about some other proposal (fixed upper limits). Irrelevant.
Side Note - We are only given that taxation is the most economically efficient, that does not imply that it is the best, or that it will be able to significantly reduce emissions. For all we know, it will not (option B). But it is still irrelevant to our conclusion about fixing upper limits
(C) Policy makers in Country Y strongly favor reductions in air pollutant emissions.
Even if they do not favour reducing these emissions, they may still not oppose, or may not oppose as strongly the suggestion of fixing upper limits. Which means, this may still be the best way (conclusion can hold true, even with negated assumption - so not Must Be True)
(D) Country Y's policy makers believe that air pollutant emissions should be reduced with maximum economic efficiency.
What they believe in does not matter. Actual action does
. From the argument, we already know that they strongly opposed what
is the most economically efficient option. Which tells us they have not acted as per their belief. More importantly, all this tells us nothing about whether the plan to fix upper limits is the best. So, not really relevant. It is not required that the policy makers have this belief for this conclusion to hold true.
(E)
Policy makers in Country Y do not oppose setting fixed upper limits on air pollutant emissions as strongly as they oppose new taxes.Correct. as per prethinking.
Hope this helps!
Harsha