Asked by Jason Vowels on Jul 07, 2024
Verified
Taxes can be used to internalize negative externalities.
Negative Externalities
Unintended and unfavourable outcomes or costs imposed on a third party not involved in a transaction or activity.
Taxes
Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization.
- Understand the contribution of government actions like subsidies and taxes to incorporate externalities into the economic system.
Verified Answer
BP
Bansi PrajapatiJul 11, 2024
Final Answer :
True
Explanation :
Taxes on goods or services that generate negative externalities (such as pollution) can help internalize the external costs, making producers and consumers take into account the social costs of their actions.
Learning Objectives
- Understand the contribution of government actions like subsidies and taxes to incorporate externalities into the economic system.
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