Multiple Choice
When producers operate in a market characterized by negative externalities, a tax that forces them to internalize the externality will
A) give sellers the incentive to account for the external effects of their actions.
B) increase demand.
C) increase the amount of the commodity exchanged in market equilibrium.
D) restrict the producers' ability to take the costs of the externality into account when deciding how much to supply.
Correct Answer:
Verified
Correct Answer:
Verified
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