If a producer is imposing an external cost on society,the best response would be to
A) lower the producer's taxes to offset pollution.
B) increase the production.
C) internalize the externality.
D) subsidize the producer.

Question

Quizplus · Accepted Answer

The best response would be to internalize the externality, which means making the producer pay for the cost they are imposing on society. This can be achieved by implementing policies such as taxes or regulations that require the producer to reduce the external cost. Lowering the producer's taxes or subsidizing them would not address the external cost, and increasing production could potentially exacerbate the problem.

If a Producer Is Imposing an External Cost on Society,the