Most Taxes Distort Incentives and Move the Allocation of Resources

question 32

Multiple Choice

Most taxes distort incentives and move the allocation of resources away from the social optimum. Why do corrective taxes avoid the disadvantages of most other taxes?

• A)Corrective taxes apply only to goods that are bad for people's health, such as cigarettes and alcohol.
• B)Because corrective taxes correct for market externalities, they take into consideration the well-being of bystanders.
• C)Corrective taxes provide incentives for the conservation of natural resources.
• D)Corrective taxes do not affect deadweight loss.

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Definitions:

Privacy Rule

Regulations designed to protect the confidentiality of individuals' health information, limiting access and use of personal medical records.

Privacy Officer

A designated individual responsible for ensuring an organization's compliance with privacy laws and maintaining the confidentiality of protected information.

Procedural Practices

Refers to established methods and procedures followed in a specific field or profession.

Deadbolt Locks

A locking mechanism distinct for its strength and security, requiring a key or knob to open, often used as an additional security feature on doors.