A government wants to use market forces to eliminate a negative externality in the consumption of a good. Which policy is most likely to be the most effective?
- AIt should provide information about the undesirable side-effects of the good.
- BIt should give producers a subsidy, to allow consumers to purchase the product more cheaply.
- CIt should impose an indirect tax on consumers, to reduce consumption to the socially efficient level.
- DIt should not interfere at all, to allow the free market to generate maximum efficiency.