Which of the following statements is true?
A) A tax applied to an activity that generates a negative externality always brings about the socially optimal level of output.
B) A subsidy applied to an activity that generates a positive externality always brings about the socially optimal level of output.
C) A tax applied to an activity that generates a positive externality may bring about the socially optimal level of output.
D) A tax applied to an activity that generates a negative externality may bring about the socially optimal level of output.
Correct Answer:
Verified
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