​A Rain Barrel Is a Container That Captures and Stores

Multiple Choice

​A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. Rain barrels provide an external benefit to the community through water conservation. What can the government do to equate the equilibrium quantity of rain barrels and the socially optimal quantity of rain barrels?

A) ​impose a tax on rain barrels that is equal to the per-unit externality
B) ​offer a subsidy on rain barrels that is equal to the per-unit externality
C) ​encourage homeowners to bargain with rain barrel producers
D) nothing​