Altering incentives so that people take account of the external effects of their actions
A)is called internalizing the externality.
B)can be done by imposing a corrective tax.
C)is the role of government in markets with externalities.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

All the given options are correct. Internalizing the externality means making people bear the costs and benefits of their actions, imposing a corrective tax is one of the ways to internalize externalities, and it is the role of the government to ensure that externalities are accounted for in markets.

Altering Incentives So That People Take Account of the External