Which of the following statements is most correct? Pigovian taxes (corrective taxes) are Select one or...

Which of the following statements is most correct? Pigovian taxes (corrective taxes) are

Select one or more:

a. often preferred over direct regulation because they typically reduce externalities at a lower cost.

b. less preferred than direct regulation because they typically reduce externalities at a higher cost.

c. often preferred over direct regulation because they typically reduce externalities at a faster rate.

d. less preferred than direct regulation because they typically reduce externalities at a slower rate.

e. Either C or D.

Solutions

Expert Solution

Answer : A is the answer

Pigouvian tax is used to reduce the externalities at lower cost. It is a tax rate which is inclined to correct the undesirable and insufficient market conditions such as market failure. The purpose of this tax is to reduce the cost which is incurred by user of negative externality and producers.

Rahul Sunny answered 1 year ago

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