Taxing the producer of an externality based on the amount of the externality produced is equivalent to which of the following?

Question

Quizplus · Accepted Answer

Taxing the producer of an externality-based on the amount of the externality produced increases the cost for the producer to produce the good or service, thereby making them pay for their impact on society. This is equivalent to increasing the producer's input costs.

Taxing the Producer of an Externality Based on the Amount