The graph shown displays a market with an externality. Which of the following statements is true? A tax of $12 per unit would eliminate deadweight loss.The government should use a subsidy to counteract this externality.If the government does not intervene, deadweight loss will be $0.
A)I and II only
B)I only
C)II only
D)II and III only

Question

The graph shown displays a market with an externality.  Which of the following statements is true? A tax of $12 per unit would eliminate deadweight loss.The government should use a subsidy to counteract this externality.If the government does not intervene, deadweight loss will be $0.
A)I and II only 
B)I only 
C)II only 
D)II and III only

Quizplus · Accepted Answer

The Answer of The graph shown displays a market with an externality.  Which of the following statements is true? A tax of $12 per unit would eliminate deadweight loss.The government should use a subsidy to counteract this externality.If the government does not intervene, deadweight loss will be $0.
A)I and II only 
B)I only 
C)II only 
D)II and III only

The Graph Shown Displays a Market with an Externality