APFIVE Pigouvian Tax and External Costs
How does the implementation of a Pigouvian tax on a negative externality affect the relationship between marginal social cost and marginal private cost?
A
It eliminates the concept of marginal social cost entirely
B
It makes marginal private cost exceed marginal social cost
C
It aligns marginal private cost with marginal social cost by internalizing the external cost
D
It widens the gap between marginal social cost and marginal private cost
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