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.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials purchased and the expected cost of materials, adjusted for the actual quantity purchased.

Production Line

An arrangement of machines and workers in a factory where a product passes sequentially from operation to operation until completed.

Waste

Unwanted materials or substances produced by a manufacturing process or during consumption, often associated with inefficiency or environmental harm.

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance.