Which of the following economic actions demonstrates a negative incentive?
A negative incentive is an economic action or policy that discourages individuals or businesses from engaging in certain behavior or activities. It is designed to reduce or discourage the occurrence of an undesirable action.
Among the options provided, the economic action that demonstrates a negative incentive is:
- Imposing a tax on carbon emissions: This action aims to discourage the release of pollutants into the atmosphere and reduce the carbon footprint. By taxing carbon emissions, governments aim to make it more expensive for businesses and individuals to pollute, thereby incentivizing them to seek cleaner and more environmentally friendly alternatives.