The biggest problem with using a tax as a way to solve an externality problem is that:
A)the tax sometimes increases the external cost.
B)damages must be estimated in financial terms to determine the correct level of the tax.
C)the firm will pass the entire tax onto the consumer.
D)the commerce clause forbids such taxes.

Question

Quizplus · Accepted Answer

Estimating damages in financial terms is challenging because it requires accurately quantifying the externality's impact, which can be complex and subjective.

The Biggest Problem with Using a Tax as a Way