Limitations of a Pigouvian Tax Include

question 26

Multiple Choice

Limitations of a Pigouvian tax include:

• A) difficulty of measuring the externality
• B) difficulty of measuring economic damage of the externality
• C) difficulty of measuring societal preferences for reduction of the externality
• D) all of the other three answers

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Definitions:

Measurements

The act or process of determining the size, quantity, or degree of something using standard units.

Possible

That which can be done or achieved; within the limits of ability, capacity, or realization.

Standard Error

A measure of the dispersion or variation of sample means around the population mean.

Sample Correlation

A statistical measure that indicates the degree to which two variables change together, based on a sample of data, showing whether the relationship is positive, negative, or nonexistent.