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4 September, 05:27

A government can correct a negative externality of consumption by ...

A) A tax

B) A price ceiling

C) A subsidy

D) None of these

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Answers (1)
  1. 4 September, 05:48
    0
    Answer: A tax

    Explanation: Negative externalities may be explained as the adverse effect or burden placed on those outside the the production or market of a particular product or those who aren't involved in its production by the manufactures or producers. The burden or inconveniences caused isn't compensated or rewarded. Such action is referred to as negative externalities. Negative externalities could include; Noise and air pollution, physical damage to infrastructure such as roads or buildings, traffic and so on. Therefore introducing taxes means producers of negative externalities pay for the cost of repair of the social damage systematically perpetrated.
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