A Benefit of Taxes Over Regulation to Internalize Externalities Is

question 43

Multiple Choice

A benefit of taxes over regulation to internalize externalities is

• A) it is easier to choose the optimal amount of taxes than the optimal amount of regulation.
• B) regulations are more difficult to impose than taxes.
• C) taxes equate the social costs with the social benefits.
• D) taxes provide incentives to adopt new methods to reduce the externality.

---

Definitions:

Owner's Withdrawals

Amounts of money or other assets that the owner takes out of the company for personal use.

Owner's Equity

The total value of assets a business owner has rights to after all liabilities are paid off; equity for sole proprietorships.

Liabilities

Financial obligations or debts that a company owes to others, including loans, accounts payable, and mortgages.

Owner's Equity

The residual interest in the assets of an entity that remains after deducting its liabilities; also known as shareholders' equity for corporations.