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The Graph Shown Displays a Market with an Externality

Question 99

Multiple Choice

The graph shown displays a market with an externality. The graph shown displays a market with an externality. Which of the following statements is true? A tax of $12 per unit would eliminate deadweight loss.The government should use a subsidy to counteract this externality.If the government does not intervene, deadweight loss will be $0. A) I and II only B) I only C) II only D) II and III only Which of the following statements is true? A tax of $12 per unit would eliminate deadweight loss.The government should use a subsidy to counteract this externality.If the government does not intervene, deadweight loss will be $0.


A) I and II only
B) I only
C) II only
D) II and III only

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