One way for the government to eliminate a negative externality is to

Question

Quizplus · Accepted Answer

All of the above options (charging an emissions fee, setting an emissions standard, and levying an effluent charge) can be effective ways for the government to eliminate a negative externality such as pollution. Charging an emissions fee makes it more expensive for firms to pollute, incentivizing them to reduce their emissions. Setting an emissions standard sets a maximum limit on emissions, forcing firms to adopt cleaner technologies or reduce their output to meet the standard. Levying an effluent charge imposes a tax on firms for every unit of pollution they emit, providing a direct incentive to reduce emissions. Combining these different approaches can create a comprehensive policy package to address negative externalities.

One Way for the Government to Eliminate a Negative Externality