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Which statement best describes what occurs over the course of the following reaction?
Firms
Business entities that produce goods or provide services to consumers, aiming to maximize profits.
Pigouvian Taxes
Taxes imposed on any market activity that generates negative externalities (costs not reflected in the market price) to correct the market outcome.
External Costs
Costs that are not borne by the producers or users of a product or service, but by society or the environment.
Polluting Firms
Companies that release harmful substances into the environment as a byproduct of their production processes.
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