Exhibit 17-1 If technology is fixed, the discrepancy between the private equilibrium and the efficient level of output in Exhibit 17-1 is best eliminated by
A)subsidizing the production of the good by $10 per unit
B)taxing the firm producing the good by $10 per unit
C)using a quota system to encourage production of at least 160 units of the good
D)using a quota system to restrict production of the good to no more than 160 units
E)letting the private market operate freely to determine output at equilibrium

Question

Exhibit 17-1  If technology is fixed, the discrepancy between the private equilibrium and the efficient level of output in Exhibit 17-1 is best eliminated by
A)subsidizing the production of the good by $10 per unit 
B)taxing the firm producing the good by $10 per unit 
C)using a quota system to encourage production of at least 160 units of the good 
D)using a quota system to restrict production of the good to no more than 160 units 
E)letting the private market operate freely to determine output at equilibrium

Quizplus · Accepted Answer

The Answer of Exhibit 17-1  If technology is fixed, the discrepancy between the private equilibrium and the efficient level of output in Exhibit 17-1 is best eliminated by
A)subsidizing the production of the good by $10 per unit 
B)taxing the firm producing the good by $10 per unit 
C)using a quota system to encourage production of at least 160 units of the good 
D)using a quota system to restrict production of the good to no more than 160 units 
E)letting the private market operate freely to determine output at equilibrium

Exhibit 17-1 If Technology Is Fixed, the Discrepancy Between