-In the Above Figure, Market Equilibrium at Point E Yields

Multiple Choice

-In the above figure, market equilibrium at point E yields the quantity X. The quantity X* is socially optimal amount. The government can achieve the optimal outcome by

A) setting the price at P₁.
B) establishing a tax of P₃ - P₁ per unit of the good sold.
C) establishing a tax of P₃ - P₂ per unit of the good sold.
D) setting the price at P₄.