Consider a Competitive Market in Which the MPB = 180

Multiple Choice

Consider a competitive market in which the MPB = 180 - 2q and the MSC = q.In this market, however, there is a positive consumption externality of $60 per unit consumed.What government intervention will result in the efficient outcome?

A) The government implement a tax of $60, levied on consumers.
B) The government provide a consumption subsidy of $60 per unit, provided to consumers.
C) The government subsidize producer by $60 per unit.
D) Both b and C