Raising cattle causes negative externalities in the form of gas and manure produced by cows, which contains methane, a greenhouse gas that causes climate change. Suppose the government is developing a policy to counteract this externality. Which of the following is a policy that directly targets the externality?
A)A tax on methane emissions
B)A tax on cow purchases
C)Tradeable permits where each allowance is for one cow
D)All of these are policies that target the externality.

Question

Quizplus · Accepted Answer

A tax on methane emissions directly targets the negative externality by imposing a cost on the emission of greenhouse gases, which is the specific cause of the environmental harm.

Raising Cattle Causes Negative Externalities in the Form of Gas