A Pigovian tax will _______ the price when imposed on consumers and _______ the price when imposed on producers.
A)increase; decrease
B)decrease; increase
C)increase; increase
D)decrease; decrease

Question

Quizplus · Accepted Answer

A Pigovian tax, whether imposed on consumers or producers, generally increases the price of the good or service to which it is applied. This is because the tax is intended to correct for externalities by incorporating external costs into the market price.

A Pigovian Tax Will _______ the Price When Imposed on Consumers