A Benefit of Taxes Over Regulation to Internalise Externalities Is

question 27

Multiple Choice

A benefit of taxes over regulation to internalise 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:

Specialization

The process of focusing on a narrow area of expertise or production, enhancing efficiency and skill through the division of labor.

High Consumption-Low Investment

This term refers to an economic situation where a country or entity spends a significant portion of its income on consumption rather than investing in capital goods that could contribute to future growth.

High Investment-Low Consumption

An economic strategy or situation that focuses on higher levels of investment in capital and infrastructure while maintaining lower levels of consumer spending.

Marginal Benefit

The additional satisfaction or utility that an individual gains from consuming one more unit of a good or service.