Question

which of the following is not an example of a corrective tax or subsidy used to address an externality problem? the government charges ku's company a tax equal to the difference between the marginal social cost and the marginal private cost of emissions. marlo's customers have been bothered by the noisy, midday deliveries at the business next door. she arranges to cover part of the delivery costs in order to have the neighbor's deliveries arrive early in the morning rather than at midday. the government discourages the production of paper products in a suburban community by imposing a unit tax on the production of such products, limiting paper companies' emissions of carcinogenic toxins. the government covers part of the cost of a particular immunization.

Answer 1

The government covering part of the cost of a particular immunization is not an example of a corrective tax or subsidy used to address an externality problem.

Step-by-step explanation:

The correct answer is:

The government covers part of the cost of a particular immunization.

A corrective tax or subsidy is usually applied to address an externality problem. Corrective taxes are imposed on activities that create negative externalities, while subsidies are granted for activities that produce positive externalities. In this case, the government covering part of the cost of a particular immunization does not fall under the category of a corrective tax or subsidy because it is not directly related to addressing externalities.

Answer 2

Among the given scenarios, Marlo's arrangement to cover part of her neighbor's delivery costs is not a government-imposed corrective tax or subsidy. Taxes on emissions and production practices are government tools to address externalities by incorporating the marginal social cost into production costs, while subsidies, such as covering immunization costs, are used to encourage socially beneficial actions.

Step-by-step explanation:

Corrective taxes and subsidies are economic tools used by governments to address externalities by altering the cost of production for businesses. A tax on polluting goods is an example of a corrective tax, aimed to make the private cost reflect the marginal social cost (MSC), thus guiding firms to a socially optimal level of production. This is done by taxing a good or service to an extent that external costs are internalized in its price. On the other hand, government subsidies support certain actions or products to encourage more of these behaviors or reduce the associated negative externalities. Subsidies increase the supply by reducing the cost of production.

In the scenarios provided, the government charging a tax equal to the difference between the marginal social cost and the marginal private cost of emissions, and imposing a unit tax on paper production to reduce emissions of carcinogenic toxins, are both examples of a corrective tax. However, the particular example where a business owner, Marlo, arranges to cover part of the delivery costs to adjust the timing of a neighbor's deliveries, does not represent a government-imposed corrective tax or subsidy; rather, it's a private agreement to mitigate an externality. Meanwhile, the government covering part of the cost of a particular immunization is an example of a subsidy aimed at increasing the social benefit of widespread vaccination.