The downside of using a tax to target specific activities, rather than the externality itself, is:
A)it risks misaligning the incentives that producers and consumers face with the goal of minimizing the externality.
B)it requires a number of different activities to be identified and several different policies to be written, which can be cumbersome and difficult to manage.
C)any one activity is likely to not make a significant difference in the presence of an externality.
D)All of these statements are true.

Question

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The Answer of The downside of using a tax to target specific activities, rather than the externality itself, is:
A)it risks misaligning the incentives that producers and consumers face with the goal of minimizing the externality.
B)it requires a number of different activities to be identified and several different policies to be written, which can be cumbersome and difficult to manage.
C)any one activity is likely to not make a significant difference in the presence of an externality.
D)All of these statements are true.

The Downside of Using a Tax to Target Specific Activities