The government imposes taxes on firms which generate external costs in an effort to

Name: The government imposes taxes on firms which generate external costs in an effort to
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Question

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The government imposes taxes on firms which generate external costs in an effort to force decision makers to consider the full costs of their actions. By imposing taxes, decision makers are incentivized to internalize the external costs which were previously ignored, resulting in more efficient resource allocation.

The Government Imposes Taxes on Firms Which Generate External Costs