A ???______ is enacted to correct the effects of a negative externality:
A)regulation
B)deadweight loss
C)corrective tax
D)tradeable permit

Question

Quizplus · Accepted Answer

A corrective tax, also known as a Pigouvian tax, is a tax levied by the government on a good or service that generates negative externalities. The purpose of the tax is to make the price of the good or service equal to its true social cost, thereby eliminating or reducing the negative externalities. This is done by adding the cost of the negative externality to the price of the good or service, encouraging consumers to reduce consumption, and incentivizing producers to find ways to reduce the negative externality.

A ???______ Is Enacted to Correct the Effects of a Negative