Asked by Corien Frazier on Jun 26, 2024
Verified
A Pigouvian tax can lead to the efficient level of production and consumption of:
A) a public good.
B) a common resource.
C) an artificially scarce good.
D) no goods since all taxes cause inefficiency.
Pigouvian Tax
A tax imposed on activities that generate negative externalities, intended to correct an inefficient market outcome by internalizing the external costs.
Efficient Level
A point at which resources are allocated in the most effective manner, maximizing output without wasting resources.
- Become acquainted with diverse economic measures and policies, for instance, Pigouvian taxes, tradable permits, and property rights, to manage externalities and secure efficient resource distribution.
Verified Answer
KF
keyri fuentesJun 27, 2024
Final Answer :
B
Explanation :
A Pigouvian tax is a tax imposed on a good that generates negative externalities, such as pollution from the production of a common resource. By increasing the cost of production, the tax shifts the supply curve to the left, reducing the quantity produced and consumed to a socially optimal level. Therefore, a Pigouvian tax leads to the efficient level of production and consumption of a common resource.
Learning Objectives
- Become acquainted with diverse economic measures and policies, for instance, Pigouvian taxes, tradable permits, and property rights, to manage externalities and secure efficient resource distribution.