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What Is Meant by the Term "Internalizing an Externality"? How

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Essay

What is meant by the term "internalizing an externality"? How does a Pigovian tax or subsidy internalize an externality?


Definitions:

Spina Bifida

A birth defect where there is incomplete closing of the backbone and membranes around the spinal cord.

Herniated Disk

A condition in which the nucleus pulposus (the soft, gelatinous center) of the spinal disk bulges or ruptures through a tear in the tougher, outer ring, potentially causing pain and nerve irritation.

Annulus Fibrosus

The tough, outer ring of intervertebral discs designed to contain the nucleus pulposus and distribute pressure evenly across the disc.

Nucleus Pulposus

The inner core of the vertebral disc, composed of a jelly-like material that helps absorb shock and maintain spine flexibility.

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