Economics · Market Failures and Externalities
Which of the following policy instruments is directly targeted and highly effective at preventing or correcting external diseconomies (negative externalities) in production?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Trade policies
- 2Production subsidies
- 3A direct corrective tax (Pigouvian tax)✓
- 4Import Tariff
Correct answer
A direct corrective tax (Pigouvian tax)
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