If the government were to decide that for the best interests of the country each litre of petrol should cost $2.50 instead of $1.50, it would be making an assumption about:
A)subsidies
B)Pigovian taxes
C)the social cost of petrol
D)the private cost of petrol

Question

Quizplus · Accepted Answer

The government's decision to increase the price of petrol from $1.50 to $2.50 is based on the assumption about the social cost of petrol. This implies that the government is considering the external costs (such as pollution and environmental degradation) associated with petrol consumption that are not reflected in its private cost.

If the Government Were to Decide That for the Best