If a good incurs a negative externality, then the socially desirable output level can be reached by

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When a good incurs a negative externality, the social cost of producing that good is greater than the private cost paid by producers. This leads to overproduction of the good in the market, which is socially undesirable. To reach the socially desirable output level, the supply of the good needs to be decreased, so that the social cost is closer to the private cost. This can be achieved through measures like taxes on producers, which increase the cost of production and decrease the supply of the good. Therefore, the best choice to reach the socially desirable output level in this scenario is to decrease the supply of the good (choice B).

If a Good Incurs a Negative Externality, Then the Socially