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(Figure: Market Efficiency) If the Socially Optimal Quantity of the Good

Question 28

Multiple Choice

(Figure: Market Efficiency) If the socially optimal quantity of the good is 200 pounds, there is a _____ externality, so the government should enact a _____ per pound to increase market efficiency. (Figure: Market Efficiency) If the socially optimal quantity of the good is 200 pounds, there is a _____ externality, so the government should enact a _____ per pound to increase market efficiency. A) negative; $6 tax B) negative; $1 tax C) positive; $6 subsidy D) positive; $1 subsidy


A) negative; $6 tax
B) negative; $1 tax
C) positive; $6 subsidy
D) positive; $1 subsidy

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