The Production of a Particular Good Generates a Negative Externality

Multiple Choice

The production of a particular good generates a negative externality. To reduce the amount of this externality, the government sets a limit on the quantity of the product that can be produced. This type of action shows the government ______ to deal with the externality.

A) imposing a tax
B) using private bargains
C) setting a quota
D) using a subsidy