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In the Presence of a Negative Externality,a Specific Tax Can

Question 91

Multiple Choice

In the presence of a negative externality,a specific tax can achieve the social optimum because


A) output is reduced to zero as a result.
B) it internalizes the external cost.
C) it directly charges the producer for polluting.
D) the price of the good rises by the full amount of the tax.

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