If utilities pollute the air too much in private equilibrium,corrective taxation of the utilities would:

Question

Quizplus · Accepted Answer

Corrective taxation is a form of Pigouvian tax imposed on firms that generate negative externalities. In this case, utilities polluting the air is generating a negative externality, and corrective taxation would impose a tax on these firms to reduce their production and generate less pollution. This would increase their costs, which would shift the private marginal cost curve upward. So, the correct answer is D, as it would reduce pollution and shift the private marginal cost curve upward.

If Utilities Pollute the Air Too Much in Private Equilibrium,corrective