If the Revenues from a Pigovian Tax Are Not Directed

question 71

Multiple Choice

If the revenues from a Pigovian tax are not directed to those who are affected by the externality,the outcome:

• A) is efficient and maximizes surplus.
• B) is not efficient and does not maximize surplus.
• C) is efficient, but does not maximize surplus.
• D) is not efficient and maximizes surplus.

---

Definitions:

Increases

The action or process of becoming larger in quantity, size, amount, or degree in a financial or numerical context.

Asset Account

An account that represents a resource owned or controlled by a business, expected to provide future economic benefits.

Debit

An entry recorded on the left side of an account in double-entry bookkeeping that increases asset or expense accounts, or decreases liability, equity, or revenue accounts.

Liability Account

An accounting record of obligations or debts that a company owes to others, typically outside of the company.