O-LevelEconomicsThe allocation of resources2281/11 · May/June 2010 · Q101 Mark

What could a government do to reduce external costs in the economy?

ADecrease direct tax for higher income earners.

BDecrease direct tax for lower income earners.

CIncrease indirect tax on petrol/gasoline.

DRemove indirect tax on tobacco.

✓ Correct answer

C: Increase indirect tax on petrol/gasoline.

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, May/June 2010 Paper 1 Variant 1, question 10.

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