Which of the Following Statements Describes the Best Way to Internalize

question 18

Multiple Choice

Which of the following statements describes the best way to internalize a negative externality?

• A) A producer's cost could be reduced by an amount greater than the external cost resulting from the production of a good.
• B) A producer could receive a subsidy equal to the external cost resulting from the production of a good.
• C) A producer's costs could be reduced by an amount equal to the external cost resulting from the production of a good.
• D) A producer's costs could be increased by an amount equal to the external cost resulting from the production of a good.

---

Definitions:

Title Passes

The transfer of ownership of property from one party to another, typically upon satisfaction of specified conditions.

Buyer

An individual or entity that purchases goods or services from another in a commercial transaction.

Allocation Of Risk

The process of defining and assigning the financial or operational responsibilities associated with potential risks in contractual agreements.

Parties

Individuals, groups, or entities that enter into a legal agreement or are involved in a legal proceeding.