A Pigovian tax:
A)counters the effect of a negative externality.
B)increases efficiency in a market.
C)increases total surplus in a market.
D)All of these are true.

Question

Quizplus · Accepted Answer

A Pigovian tax is designed to counter the effects of a negative externality by making the cost of the externality explicit to the producer or consumer, thereby increasing market efficiency and total surplus by aligning private costs with social costs.

A Pigovian Tax