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What Would Happen If the Government Tries to Internalize an Externality,generated

Question 5

Multiple Choice

What would happen if the government tries to internalize an externality,generated from the production of a commodity,through taxation?


A) The commodity will be overproduced
B) The commodity will definitely be underproduced
C) The market level of output will coincide with the efficient level
D) The price of the commodity will decline

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