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daser333 [38]
3 years ago
9

An individual or a firm can internalize an externality by​ ___________. A. disputing that an externality exists. B. doubling the

size of the externality. C. paying the cost of the externality. D. ignoring the externality.
Business
1 answer:
xxTIMURxx [149]3 years ago
5 0

Answer:

C. paying the cost of the externality

Explanation:

An externality is defined as cost or benefit that is generated from the activities of a producer, but it is not financially incurred by the producer.

It can be positive or negative externality.

For example if we have a street light the effect on the society does not affect the producer cost wise so it is an externality to him.

When a producer now bears the cost of an externality he is internalizing the externality.

For example if a company polluted the environment with a byproduct of its production process this is a negative externality.

They can internalise it by cleaning up the pollutant from the society.

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