To Correct a Negative Externality Problem, the Government Can Impose

Multiple Choice

To correct a negative externality problem, the government can impose

A) a subsidy to increase the marginal private costs.
B) a subsidy to increase the marginal social costs.
C) a tax to increase the marginal private costs.
D) a tax to increase the marginal social costs.
E) either a tax or a subsidy to change the marginal social costs.