Multiple Choice
Refer to the figure below. If negotiation is impractical, the socially optimal level of production can be achieved by: 
A) banning production of paper.
B) compensating those injured by the externality.
C) imposing a tax on paper equal to the external cost.
D) subsidizing paper by the amount of the the external benefit.
Correct Answer:
Verified
Correct Answer:
Verified
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