A tax used to internalize the social cost of pollution is called a(n) ________tax.
A) value-added
B) Pigouvian
C) excise
D) personal

Question

Quizplus · Accepted Answer

A Pigouvian tax is specifically designed to correct the negative externalities of a market activity, such as pollution, by imposing a tax equal to the external cost. This encourages producers to reduce the quantity of pollution they emit.

A Tax Used to Internalize the Social Cost of Pollution