A tax on an externally costly activity is ______ command and control regulation that seeks to limit the activity.
A) more efficient than
B) less efficient than
C) equally efficient as
D) sometimes more and sometimes less efficient than

Question

Quizplus · Accepted Answer

A tax on an externally costly activity provides incentives for individuals and firms to reduce their use of the activity or find less costly alternatives. This creates a market-based solution that can be more efficient than traditional command and control regulations, which can be costly to enforce and may not provide the same level of flexibility and innovation.

A Tax on an Externally Costly Activity Is ______ Command