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

-Refer to the scenario above. In order to ensure that the manufacturing unit produces the socially optimal level of output, the government should________.
A) impose a per unit tax of $1
B) impose a per unit tax of $2
C) provide a subsidy of $1 per unit
D) provide a subsidy of $2 per unit

Question

The diagram below shows the demand curve, supply curve, and the marginal social cost curve for a manufacturing unit.
 
-Refer to the scenario above. In order to ensure that the manufacturing unit produces the socially optimal level of output, the government should________.
A) impose a per unit tax of $1 
B) impose a per unit tax of $2 
C) provide a subsidy of $1 per unit 
D) provide a subsidy of $2 per unit

Quizplus · Accepted Answer

The Answer of The diagram below shows the demand curve, supply curve, and the marginal social cost curve for a manufacturing unit.
 
-Refer to the scenario above. In order to ensure that the manufacturing unit produces the socially optimal level of output, the government should________.
A) impose a per unit tax of $1 
B) impose a per unit tax of $2 
C) provide a subsidy of $1 per unit 
D) provide a subsidy of $2 per unit

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