Who is affected when a Pigovian tax is imposed on a market with a negative production externality?
A)Producers
B)Consumers
C)Those affected by the externality
D)All of these groups are affected when a Pigovian tax is imposed.

Question

Quizplus · Accepted Answer

A Pigovian tax, designed to correct for negative externalities, impacts producers by increasing their costs, consumers through potentially higher prices, and those directly affected by the externality, as the tax aims to reduce the negative impacts they experience. Thus, all these groups are affected.

Who Is Affected When a Pigovian Tax Is Imposed on a Market