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Which of the following should be considered for 'Pigovian taxation'?
(1) Consumption of cigarettes
(2) Research for new technologies
(3) Burning of fossil fuels
(4) Restoration of lost cultural heritage
Choose the correct answer using the codes given below :
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- 1 and 3 only
- 2, 3 and 4 only
- 1, 2 and 3
- 2 and 4 only
Correct Option: A
A Pigovian tax is a tax applied to a market activity that is generating negative externalities (costs for somebody else) like cigarette consumption, burning of fossil fuel.