Corrective taxes
A)encourage consumers to avoid sales taxes by shopping online.
B)are frequently used to discourage imports.
C)are less efficient than direct regulation.
D)give factory owners an economic incentive to reduce pollution.

Question

Quizplus · Accepted Answer

Corrective taxes are also known as Pigouvian taxes, which are designed to reduce negative externalities, such as pollution. By imposing a tax on a specific activity causing harm to the environment or public health, factory owners face increased costs, which provides an economic incentive to reduce pollution and to invest in cleaner and more efficient technologies. Therefore, factory owners will have some motivation to improve their environmental performance, making these taxes more efficient compared to direct regulations.

Corrective Taxes