When the production or consumption of a good has external costs, a can be used to solve this.

price ceiling

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price floor

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pigouvian tax

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pigouvian subsidy

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Solution

The correct option is C pigouvian tax
A Pigouvian tax is a tax on a good with external costs. Pigouvian taxes can be used to solve the external cost problem. It will increase cost and decrease quantity produced/consumed.

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