One way to make consumers take a negative externality into account when making demand decisions is to:
A)place a tax on the item.
B)subsidize the purchase of the item.
C)give suppliers a production credit.
D)None of these are true.

Question

Quizplus · Accepted Answer

Placing a tax on an item that causes a negative externality (such as pollution) can increase its price, which can lead to consumers taking the negative externality into account by reducing demand for that item. This approach internalizes the external cost, making consumers more aware of the impact of their consumption choices.

One Way to Make Consumers Take a Negative Externality into Account