The government would use production taxes to remedy the problem of substantial:
A) internal benefits of production.
B) external benefits of production.
C) external costs of production.
D) external benefits of consumption
E) external costs of consumption.

Question

Quizplus · Accepted Answer

Production taxes are a form of government intervention that imposes a tax on goods and services that have negative externalities, such as pollution or other external costs of production. These taxes are levied on the producers of these goods and services, with the aim of reducing their production levels and encouraging firms to invest in cleaner, more efficient production methods. By imposing production taxes, the government can internalize some of the costs of production that would otherwise be externalized onto society, ultimately leading to a more efficient allocation of resources. Therefore, the best choice is C, external costs of production.

The Government Would Use Production Taxes to Remedy the Problem