Use the figure below to answer the following questions. Figure 15.2.1
-Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If a constant per unit tax is imposed that generates an efficient allocation of resources,then the quantity produced is

Question

Use the figure below to answer the following questions.

Figure 15.2.1
-Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If a constant per unit tax is imposed that generates an efficient allocation of resources,then the quantity produced is

Quizplus · Accepted Answer

Imposing a constant per unit tax would shift the marginal private cost curve upward by the amount of the tax, to become the marginal social cost (MSC) curve. The new intersection of the MSC and market demand curves gives the efficient quantity of output, which is where MSC=MB. In this case, the efficient quantity is Q₂. This is because it is the quantity where the MSC curve intersects the demand curve. Therefore, C is the correct answer.

Use the Figure Below to Answer the Following Questions