Refer to Figure 5-9. An efficient way to get the firm to produce the socially optimal output level is

A) to grant a subsidy to enable the industry to internalize the external costs of production.
B) to assign property rights to the firms in the industry.
C) to impose a tax to make the industry bear the external costs it creates.
D) for government to set a quota on the quantity of toilet paper that the toilet paper industry can produce.


C

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