A government regulation that bans the use of a certain polluting technology in the production of a good is an example of a ________ used to solve an externality.
A) social enforcement mechanism
B) command-and-control approach
C) market-based approach
D) Coasian approach

Question

Quizplus · Accepted Answer

A government regulation that completely bans a certain technology is a command-and-control approach, where the government sets specific rules and standards that must be followed. This is a direct intervention in the market and is often used when other approaches, such as social enforcement or market-based mechanisms, are not effective in addressing the externality.

A Government Regulation That Bans the Use of a Certain