Suppose That Smoking Creates a Negative Externality

question 229

Multiple Choice

Suppose that smoking creates a negative externality.What can the government do to equate the equilibrium quantity of cigarettes and the socially optimal quantity of cigarettes smoked?

• A)impose a tax on cigarettes that is equal to the per-unit externality
• B)offer a subsidy on cigarettes that is equal to the per-unit externality
• C)impose a regulation limiting the number of cigarettes that each consumer can purchase
• D)nothing

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