Since trash generation involves an externality, the way economists might address the problem of trash generation that is most likely to be optimal is by:
A) integrating the cost of the externality into the initial price of the good.
B) having the government require mandatory sorting and recycling of trash.
C) having the cost of the externality be paid by the government.
D) not allowing persons to throw away more trash than is acceptable as a maximum.

Question

Quizplus · Accepted Answer

Integrating the cost of the externality into the initial price of the good internalizes the externality, aligning private costs with social costs, and incentivizing producers and consumers to reduce waste.

Since Trash Generation Involves an Externality, the Way Economists Might