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
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Answer both multiple-choice questions attached. 

A Pigovian tax is:
unlikely to increase market efficiency.
O equal to the size of the deadweight loss due to an externality.
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.
the distribution of surplus may not be fair.
Transcribed Image Text:A Pigovian tax is: unlikely to increase market efficiency. O equal to the size of the deadweight loss due to an externality. 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. the distribution of surplus may not be fair.
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