Pigovian taxes
A) are used to correct negative externalities.
B) are used to correct positive externalities.
C) are primarily designed to fund government.
D) are a form of income tax.

Question

Quizplus · Accepted Answer

Pigovian taxes are taxes aimed at correcting negative externalities, such as pollution or congestion. The tax is imposed on the activity causing the externality in order to disincentivize it and encourage more socially responsible behavior. The revenue generated from this tax can be used for various purposes, but its primary goal is to adjust for the external costs that are not factored into the market price. Therefore, the correct answer is A.

Pigovian Taxes