Which of the Following Statements Is False

Multiple Choice

Which of the following statements is false?

A) A subsidy can be used to internalize a negative externality; a tax can be used to internalize a positive externality.
B) Ronald Coase stressed the reciprocal nature of externalities.
C) One way to deal with negative externalities is for government to apply regulations directly to the activity that generates the externalities.
D) Simply because taxes and subsidies are sometimes used to adjust for negative and positive externalities, respectively, it does not necessarily follow that the socially optimal level of output will be reached.