If the production of a good involves an external social cost, resource allocation could be improved by:


If the production of a good involves an external social cost, resource allocation could be improved by:
A . providing a subsidy for the consumers of the good
B . imposing an indirect tax on the good
C . providing a subsidy for the producers of the good
D . the government imposing price controls to reduce the price of the good.

Answer: B

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