Question

Corrective taxes are typically advocated to correct for the effects ofA. positive externalities.B. patents.C. negative externalities.D. All of the above are correct.

Answer 1

The correct answer is letter "C": negative externalities.

Step-by-step explanation:

Corrective taxes are levies imposed by the central government to companies generating negative externalities. The levies are intended to reduce the production of the firms causing the externality, thus, decreasing their impact. Another form of downsizing externalities is through command-and-control regulations that impose production standards and regulate firms' processes.