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amarshall90
amarshall90
30.03.2021 • 
Business

Corrective Tax Corrective Subsidy Answer Bank
Holding the door open for an elderly lady entering a store behind you. Deciding to donate blood at a local blood drive. Taking your toddler out to the car instead of letting him throw a tantrum in the middle of the grocery store. Deciding to throw your trash in a garbage bin. Picking up after your dog when you are out for a walk.
Externalities and Public Goods - End of Chapter Problem
Acceptable social norms and social recognition act like corrective taxes and subsidies. Social norms act as a corrective tax by discouraging people from partaking in an action that will cause a negative externality by fear or shame of being judged harshly by others in society. Likewise social recognition can act as a corrective subsidy and cause people to partake in more activities that will create positive externalities. Classify the following examples of social norms by whether the behavior is undertaken to avoid society's judgement, i.e., working as a corrective tax, or to receive social recognition, i.e., working as a corrective subsidy.
Corrective Tax Corrective Subsidy

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