-Refer to the diagram above.One of the reasons that a per-unit tax will result in the socially efficient level of production is that
A) producers are forced to include all costs of production,including social cost,in their supply curve.
B) producers are given a chance to make extra profit after the tax is imposed.
C) producers are given a chance to make extra profit since consumers are willing to pay more.
D) the government is collecting extra tax revenue.
E) consumers no longer consume the harmful product.

Question

-Refer to the diagram above.One of the reasons that a per-unit tax will result in the socially efficient level of production is that
A) producers are forced to include all costs of production,including social cost,in their supply curve. 
B) producers are given a chance to make extra profit after the tax is imposed. 
C) producers are given a chance to make extra profit since consumers are willing to pay more. 
D) the government is collecting extra tax revenue. 
E) consumers no longer consume the harmful product.

Quizplus · Accepted Answer

A per-unit tax internalizes the external cost by forcing producers to account for the social cost, aligning private costs with social costs and leading to a socially efficient level of production.

-Refer to the Diagram Above