Corrective Taxes That Are Imposed Upon the Producer of a Nasty

question 185

Multiple Choice

Corrective taxes that are imposed upon the producer of a nasty smell can be successful in reducing that smell because the tax makes the producer

• A)externalize the positive externality.
• B)externalize the negative externality.
• C)internalize the positive externality.
• D)internalize the negative externality.

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Definitions:

Perfectly Competitive

characterizes a market structure where there are many buyers and sellers, all selling homogeneous products, with no single participant able to influence the market price of the product.

Conditions

The circumstances or factors affecting the way in which people live or work, especially with regard to their safety or well-being.

Investment Capital

Funds invested in a project, company, or any economic endeavor with the expectation of generating a future return.

Efficient Markets

A financial market theory suggesting that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the overall market.