A Pigouvian tax is imposed to: MCQ with Answer and Explanation

Question

Share Report Error

A Pigouvian tax is imposed to:

A. internalize the external cost of a negative externality

B. reduce government revenue

C. increase imports

D. encourage production of positive externality goods

Answer: Option A

Solution (By JKSSB Mock Tests)

A Pigouvian tax is levied to make producers internalize the external cost of negative externalities.

This question belongs to: Economy GK Economy Set 1

Request complete Subject PDF

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Economy Set 1 Questions

Question #1

Share Report

Which of the following best explains the concept of 'Adverse Selection'?

A. Equal risk sharing between parties

B. Situation where one party has more information before entering a contract

C. Change in behaviour after a contract is signed

D. Perfect information leading to efficient outcomes

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
Adverse selection occurs when asymmetric information exists before a contract is signed, leading to the selection of undesirable parties (e.g., high-risk individuals buying more insurance).

This question belongs to: Economy GK Economy Set 1

Question #2

Share Report

The concept of 'Algorithmic Transparency' refers to:

A. The degree to which the functioning, criteria and effects of algorithms used by platforms or public authorities can be understood and scrutinised

B. Only the source code of open-source software

C. Only human decision-making without algorithms

D. The complete secrecy of all algorithms

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
Algorithmic transparency concerns the extent to which the logic, data and outcomes of algorithmic systems are open to inspection, explanation and accountability by users, regulators or the public.

This question belongs to: Economy GK Economy Set 1