Refer to the information provided in Figure 16.1 below to answer the question(s) that follow. Figure 16.1
-Refer to Figure 16.1. To force this firm to produce the ________ level of output, the government should ________ of $5.00 per bag of fertilizer.
A) efficient; impose a tax
B) market; issue a subsidy
C) efficient; issue a subsidy
D) market; impose a tax

Question

Refer to the information provided in Figure 16.1 below to answer the question(s) that follow.  Figure 16.1
-Refer to Figure 16.1. To force this firm to produce the ________ level of output, the government should ________ of $5.00 per bag of fertilizer.
A) efficient; impose a tax 
B) market; issue a subsidy 
C) efficient; issue a subsidy 
D) market; impose a tax

Quizplus · Accepted Answer

To achieve the efficient level of output, the government should impose a tax to internalize the externality, aligning private costs with social costs.

Refer to the Information Provided in Figure 16