A tax imposed equal to the external marginal cost of pollution is called a:

CA Foundation · Business Economics · MTP · September 2026
A tax imposed equal to the external marginal cost of pollution is called a:
(A) A. Tariff
(B) B. Pigouvian tax
(C) C. Subsidy
(D) D. Excise duty

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Pigouvian tax

Topics: Public Finance

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