One of the ways to deal with external cost is:
A) to rely on a good behaviour.
B) to invest in technological development.
C) to penalise those who bear the external cost.
D) to include the external cost in market price.

Question

Quizplus · Accepted Answer

The best way to deal with external cost is to internalize it by including it in the market price. This means that the parties involved in the transaction take into account the external cost and pay a fair price that includes it. Penalizing those who bear the external cost may not be effective in changing their behavior, and relying on good behavior may not always be possible. Investing in technological development may reduce external cost in the long run, but it may not be feasible in the short term.

One of the Ways to Deal with External Cost Is