If a Tin of Sardines Creates a Noxious Odor for Non-Sardine-Eaters

question 244

Multiple Choice

If a tin of sardines creates a noxious odor for non-sardine-eaters equivalent to $1 per tin, the government could correct the odorous externality and achieve an efficient outcome by:

• A) taxing sardine tins at a rate of $1 per tin.
• B) subsidizing sardine tins at a rate of $1 per tin.
• C) capping total sardine consumption at 1000 tins per day.
• D) banning sardines.

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