A Pigovian tax is: O unlikely to increase market efficiency. O equal to the size of the deadweight loss due to an externality. O a method of subsidizing the production of goods with social benefits. O intended to counterbalance a negative externality. Even with a Pigovian tax, a market with a negative externality may still be inefficient because: O the tax may be set too high or too low. O the government may not have the power to tax. O taxes create deadweight losses. O the distribution of surplus may not be fair.

A Pigovian tax is: O unlikely to increase market efficiency. O equal to the size of the deadweight loss due to an externality. O a method of subsidizing the production of goods with social benefits. O intended to counterbalance a negative externality. Even with a Pigovian tax, a market with a negative externality may still be inefficient because: O the tax may be set too high or too low. O the government may not have the power to tax. O taxes create deadweight losses. O the distribution of surplus may not be fair.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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