Refer to the information provided in Figure 16.2 below to answer the question(s) that follow. Figure 16.2
-Refer to Figure 16.2. To force this firm to produce the ________ level of output, the government should ________ of $10.00 per car.
A) market; impose a tax
B) efficient; impose a tax
C) market; issue a subsidy
D) efficient; issue a subsidy

Question

Refer to the information provided in Figure 16.2 below to answer the question(s) that follow.  Figure 16.2
-Refer to Figure 16.2. To force this firm to produce the ________ level of output, the government should ________ of $10.00 per car.
A) market; impose a tax 
B) efficient; impose a tax 
C) market; issue a subsidy 
D) efficient; issue a subsidy

Quizplus · Accepted Answer

To achieve the efficient level of output, the government should impose a tax to correct for the negative externalities not accounted for in the market outcome. This aligns the private cost with the social cost, leading to a more socially optimal level of production.

Refer to the Information Provided in Figure 16