Which of the following is a difference between a corrective tax and a corrective subsidy?
a. A corrective tax leads a market to allocative efficiency, while a corrective subsidy does not lead to allocative efficiency.
b. A corrective tax eliminates deadweight loss, while a corrective subsidy does not eliminate deadweight loss.
c. A corrective tax is useful in the case of negative externalities, while a corrective subsidy is useful in the case of positive externalities.
d. A corrective tax operates by decreasing the private cost of production, while a corrective subsidy operates by decreasing the private benefit of consumption.
c
You might also like to view...
Refer to Table 12.1. The nominal interest rate for the United States is
A) -0.25%. B) 0.25%. C) 2.15%. D) It cannot be determined from the information provided.
When the U.S. cuts funding for border patrol, the labor market in California is affected. We would expect the:
A. supply of labor to shift to the left. B. demand for labor to shift to the left. C. demand for labor to shift to the right. D. supply of labor to shift to the right.