In order to bring a market to its efficient outcome when a negative externality is present,the government could:
A)limit total consumption to the efficient quantity.
B)tax the affected party the value of the external cost.
C)limit the price to the efficient level.
D)Any of these would bring the market to its efficient level.

Question

Quizplus · Accepted Answer

Limiting total consumption to the efficient quantity directly addresses the negative externality by reducing the quantity to the socially optimal level, thus internalizing the external cost.

In Order to Bring a Market to Its Efficient Outcome