Question

Oscar owns a meat processing plant that emits unpleasant odors that waft across the city. Because his production of processed meat provides a negative externality to the community, the government should: impose a tax on Oscar's production of processed meat because the market quantity is less than the socially optimal quantity. impose a tax on Oscar's production of processed meat because the market quantity is less than the socially optimal quantity. subsidize Oscar's production of processed meat because the market quantity is greater than the socially optimal quantity. subsidize Oscar's production of processed meat because the market quantity is greater than the socially optimal quantity. subsidize Oscar's production of processed meat because the market quantity is less than the socially optimal quantity. subsidize Oscar's production of processed meat because the market quantity is less than the socially optimal quantity. impose a tax on Oscar's production of processed meat because the market quantity is greater than the socially optimal quantity. impose a tax on Oscar's production of processed meat because the market quantity is greater than the socially optimal quantity.

Answer 1

impose a tax on Oscar's production of processed meat because the market quantity is greater than the socially optimal quantity.

Step-by-step explanation:

Externalities are the impact that a business's activity has on its surrounding environment.

They can be positive or negative.

Negative externalities have a detrimental effect on the communities and people that exist around the company.

The case in the give scenario is a negative externality where the meat processing plant that emits unpleasant odors that waft across the city.

The socially accepted level of unpleasant odors from meat production is less than what Oscar's company is releasing to the community.

So there needs to be a tax on their production process to reduce the level