Which of the Following Illustrates the Principle of Second Best

Multiple Choice

Which of the following illustrates the principle of second best?

A) The government imposes taxes on gasoline, and the tax revenue collected is used to pay for road repair.
B) The government decides to impose taxes on all grains, rather than imposing a tax only on wheat.
C) The government imposes a tax on a paper manufacturer that equals the cost of cleaning the river damaged by the waste discharged into the river by the paper manufacturer.
D) A tax imposed on land, because this tax distorts economic decisions less than taxes on other factors of production.