What does the phrase "internalizing an external cost" mean?
A)limiting the extent to which domestic firms can outsource production
B)prohibiting economic activities that create externalities
C)forcing producers to factor into their production costs the cost of the externalities created in the production of their output
D)finding a way to address cross-border pollution

Question

Quizplus · Accepted Answer

Internalizing an external cost refers to when producers factor in the cost of externalities (such as pollution or other negative effects on society) into their production costs. This can be done through taxes, regulations or other incentives to encourage firms to reduce negative impacts on society.

What Does the Phrase "Internalizing an External Cost" Mean