The principle of second best states that
A) if previously existing distortions exist, a distortionary tax may actually improve efficiency.
B) the broader based the tax, the less distortionary it is.
C) the more inelastic the demand for a product, the less distortionary a tax on the product would be.
D) taxes should be constructed so that they are neutral.
Correct Answer:
Verified
Q181: The presence of externalities favors _ and
Q182: Which of the following illustrates the principle
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