Which of the following is a common method used by governments to cope with the situation in which the production of a good creates an external cost?
A) Subsidising production
B) Removing property rights
C) Vouchers
D) Marketable permits
E) Lottery

Question

Quizplus · Accepted Answer

Marketable permits are a common method used by governments to cope with the situation in which the production of a good creates an external cost. This involves the government issuing permits to producers, allowing them to emit a certain amount of pollution. Producers can then buy and sell these permits on a market, and the price of the permits will reflect the cost of the pollution. This incentivizes producers to reduce their emissions or buy permits from other producers who can pollute more efficiently. This approach is often seen as a more efficient way of reducing pollution than simply imposing taxes or regulations.

Which of the Following Is a Common Method Used by Governments