Corrective taxes differ from most taxes in that corrective taxes
A)enhance economic efficiency.
B)do not raise revenue from the government.
C)cause deadweight loss.
D)cannot be divided between the buyer and seller.

Question

Quizplus · Accepted Answer

Corrective taxes are designed to internalize externalities, which means that it corrects an existing market failure by creating incentives for individuals and businesses to reduce negative externalities, such as pollution or overconsumption of goods with negative social costs. By creating a market-based solution to address externalities, corrective taxes improve economic efficiency.

Corrective Taxes Differ from Most Taxes in That Corrective Taxes