ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The government can internalize an externality by imposing a tax on the producer to reduce the equilibrium quantity to the socially desirable quantity. internalizing an externality: altering incentives so that people take account of the external effects of their actions.

Detailed explanation-2: -Internalization of externalities refers to all measures (public or private) that guarantee that unpaid benefits or costs are taken into account in the composition of goods and services prices (Ding et al., 2014).

Detailed explanation-3: -Internalizing an externality involves altering incentives so that people take account of the external effects of their actions.

Detailed explanation-4: -Externalities can be internalized through market mechanism, government regulation, or self-governing institutions or a mix of these institutions.

Detailed explanation-5: -Internalizing a negative externality will cause an industry to decrease the quantity it supplies to the market and decrease the price of the good produced.