A steel-producing factory in North Palladia generates large amounts of carbon dioxide during its production process.A per-unit tax on the production of steel that equals the marginal ________ of steel production will entirely internalize the externality.
A) private cost
B) social cost
C) external cost
D) external benefit

Question

Quizplus · Accepted Answer

A per-unit tax equal to the marginal external cost of steel production will internalize the externality by making the producer account for the external costs they impose on society, such as carbon emissions.

A Steel-Producing Factory in North Palladia Generates Large Amounts of Carbon