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An Efficient Way to Get a Tire Manufacturer to Produce

Question 32

Multiple Choice

An efficient way to get a tire manufacturer to produce the socially optimal output level is


A) to impose a tax to make the tire manufacturer bear the external cost it creates.
B) for government to set a quota on the quantity of tires that it can produce.
C) to grant a subsidy to enable the manufacturer to internalize the external costs of production.
D) to assign property rights to the tire manufacturer.

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