In order to bring a market to its efficient outcome when a negative externality is present, the government might:
A)limit total consumption to the efficient quantity.
B)tax the buyers or sellers in the market at the value of the external cost.
C)limit the price of the good or service to its efficient level.
D)All of these are actions the government might take to bring about an efficient outcome.

Question

Quizplus · Accepted Answer

Taxing the buyers or sellers at the value of the external cost internalizes the externality, aligning private costs with social costs and leading to an efficient market outcome.

In Order to Bring a Market to Its Efficient Outcome