When production or consumption of a product results in negative externalities, a suitable method of government intervention may be

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The question asks about government intervention when production or consumption of a product creates negative externalities. This situation occurs when costs imposed on third parties are not reflected in market prices.
Option provided: 'a. a tax on producers of the product.' This aligns with the standard Pigovian tax approach, where a tax equal to the marginal external cost is imposed on the producer to internalize the externality. The tax raises the private cost to reflect the social cost, reduces output toward the socially optimal level, and can improve overall welfare by discouraging production or consumption to the efficient quantity.
Why this is a sensible intervention: by making producers bear some of the external costs, the market price better reflects true social costs, helping to curb overproduction or overconsumption that causes harm to others.
What this approach aims to achieve conceptually: internalize externalities, align private incentives with social welfare, and generate government revenue that can potentially be used to offset the harm or fund mitigation.
If there were additional options (though not provided here), alternatives like regulation or limits on quantity, or subsidies for less harmful substitutes, would be other possible interventions to address negative externalities, but they work through different mechanisms and trade-offs. Regulation can set ceilings on output or impose standards, while subsidies would generally be inappropriate for negative externalities as they encourage more of the activity.
In the absence of other options in the list, the tax on producers stands as the classic and widely accepted remedy for negative externalities arising from production.

When production or consumption of a product results in negative externalities, a suitable method of government intervention may be

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When production or consumption of a product results in negative externalities, a suitable method of government intervention may be

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类似问题

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A pollution charge gives the trucking industry an incentive to reduce its emissions, as long as the of reducing the emissions is .