-The figure above shows the private marginal cost curve, the social marginal cost curve and the market demand curve. To promote an efficient allocation of resources, the government could impose a constant per unit tax equal to

Question

Quizplus · Accepted Answer

The efficient quantity is Q1, where SMC = P1. A tax of P3 - P1 would raise the private marginal cost to SMC + (P3 - P1), which would lead to an efficient quantity of Q1.

-The Figure Above Shows the Private Marginal Cost Curve, the Social