What effect are corrective taxes typically advocated to correct
A)positive externalities
B)negative externalities
C)spillover technology
D)overproduction of goods with high social value

Question

Quizplus · Accepted Answer

Corrective taxes are typically advocated to correct negative externalities, which are the costs imposed on society by economic activities. For example, a tax on carbon emissions would be a corrective tax to reduce the negative externalities caused by pollution from fossil fuel usage.

Corrective taxes are not usually used to correct positive externalities, spillover technology, or overproduction of goods with high social value. Positive externalities, which are benefits that economic activities provide to society, can be addressed through subsidies. Spillover technology, which is the transfer of knowledge or technology from one firm to another, can be addressed through intellectual property rights or research grants. Overproduction of goods with high social value can be addressed through market incentives, such as creating a price floor to ensure producers are paid a fair wage.

What Effect Are Corrective Taxes Typically Advocated to Correct