3. Achieving lower pollutionSuppose the government decides to raise the gasoline tax as a way to reduce air pollution and traffic congestion to their optimal levels.Which of the following describes why corrective taxes, such as the gasoline tax, are unlike most other taxes?Other taxes are typically used to cover general spending, but funds from corrective taxes can be used only to alleviate pollution.Other taxes get passed on from businesses to consumers, whereas corrective taxes do not.Corrective taxes alter incentives, whereas other taxes typically do not.Corrective taxes bring the allocation of resources closer to the social optimum and, thus, improve economic efficiency. 5. Private solutions to correct for externalitiesConsider the following scenario:Suppose that a chicken farm uses a nearby stream to dispose of the wastes released by its chickens. These wastes flow downstreaminto a lake that has become thick with algae and polluted due to the minerals in the waste matter. The local office of a nonprofitenvironmental organization collects enough donations to stop the farm's pollution.Which of the following types of private solutions to the externality of pollution has occurred in this case?Moral codes and social sanctionsCharitiesIntegration of different types of businesses through merger or acquisitionContractsIt's important to note that sometimes private solutions to externalities do not work. For example, this occurs when communications barriers or socialcustoms are important enough relative to the potential gains involved that

3. Achieving lower pollution Suppose the government decides to raise the gasoline tax as a way to reduce air pollution and traffic congestion to their optimal levels. Which of the following describes why corrective taxes, such as the gasoline tax, are unlike most other taxes? Other taxes are typically used to cover general spending, but funds from corrective taxes can be used only to alleviate pollution. Other taxes get passed on from businesses to consumers, whereas corrective taxes do not. Corrective taxes alter incentives, whereas other taxes typically do not. Corrective taxes bring the allocation of resources closer to the social optimum and, thus, improve economic efficiency.

3. Achieving lower pollution Suppose the government decides to raise the gasoline tax as a way to reduce air pollution and traffic congestion to their optimal levels. Which of the following describes why corrective taxes, such as the gasoline tax, are unlike most other taxes? Other taxes are typically used to cover general spending, but funds from corrective taxes can be used only to alleviate pollution. Other taxes get passed on from businesses to consumers, whereas corrective taxes do not. Corrective taxes alter incentives, whereas other taxes typically do not. Corrective taxes bring the allocation of resources closer to the social optimum and, thus, improve economic efficiency.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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