Which of the following is a way to address an externality problem?
A)command and control solution
B)corrective tax
C)corrective subsidy
D)all of the above.

Question

Quizplus · Accepted Answer

All of the above can be ways to address an externality problem. Command and control solutions involve regulations and laws that dictate the actions of those causing the externality. Corrective taxes can be used to internalize the cost of the externality, making the individuals creating the externality pay the cost. Corrective subsidies can be used to incentivize individuals or firms to reduce the negative impact of the externality. All options should be explored to determine the most effective way to address the externality problem.

Which of the Following Is a Way to Address an Externality