To Correct for a Negative Externality, a Government Might Impose

question 97

Multiple Choice

To correct for a negative externality, a government might impose a uniform tax related only to the physical quantity of pollution if

• A) the administrative costs are high.
• B) the cost of ascertaining the actual economic costs are relatively small.
• C) the economic damages are zero.
• D) the economic damages associated with the pollution are different across different locations.

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