Figure 10-6

-Refer to Figure 10-6.Which curve best represents a corrective tax
A)A
B)B
C)neither
D)both could represent a corrective tax depending on the industry being taxed

Question

Figure 10-6
 
-Refer to Figure 10-6.Which curve best represents a corrective tax
A)A 
B)B 
C)neither 
D)both could represent a corrective tax depending on the industry being taxed

Quizplus · Accepted Answer

A corrective tax is meant to address negative externalities by increasing the cost of production or consumption, shown by shifting the supply or demand curve to the left. Curve A shows a shift in the supply curve to the left, indicating a tax on producers that would increase costs and discourage production, making it the best choice to represent a corrective tax in this scenario.

Figure 10-6 -Refer to Figure 10-6.Which Curve Best Represents a Corrective Tax