The Diagram Below Shows the Demand Curve, Supply Curve, and the Marginal

Multiple Choice

The diagram below shows the demand curve, supply curve, and the marginal social cost curve for a manufacturing unit.

-Refer to the scenario above. If the government imposes a tax of _______,output will ______.

A) $1; fall below the socially optimal level
B) $2; rise above the socially optimal level
C) $2.50; fall below the socially optimal level
D) $4.50; rise above the competitive level