What is the biggest problem of using government actions such as taxes and pollution charges to control external costs?
A) insufficient legal power to enforce the controls
B) obtaining enough data to determine how much the tax or pollution charge will be
C) In some situations, there is no known way to control the external costs.
D) political lobbying and voter disagreement
E) The Coase theorem points out that taxes and pollution charges work only in the short run and not in the long run.

Question

Quizplus · Accepted Answer

Determining the appropriate level of taxes or pollution charges requires accurate data on the external costs, which can be difficult to obtain.

What Is the Biggest Problem of Using Government Actions Such