Identify the objective achieved by imposing heavy taxes on production units engaged in producing harmful product like liquor, cigrattes etc.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Reallocation of Resources
By taxing harmful products heavily, governments aim to discourage their consumption and encourage resources to be allocated towards more socially beneficial goods and services. This helps in promoting public health and reducing the negative externalities associated with such products.