When the government uses a command-and-control policy to solve an externality, it
A)is usually the most effective policy option available.
B)creates policies that directly regulate behavior.
C)usually involves taxing the consumption of a commodity.
D)typically refers to the Coase theorem to structure the policy.

Question

Quizplus · Accepted Answer

Command-and-control policies directly regulate behavior by imposing specific standards and regulations on individuals and firms. This type of policy is often used to address negative externalities where market solutions are insufficient to address the problem.

When the Government Uses a Command-And-Control Policy to Solve an Externality