-Suppose That Production of the Product in Figure 14-2 Imposes

-Suppose that production of the product in Figure 14-2 imposes a cost on society of $7.00 per unit.If the free market equilibrium is at the intersection of demand curve D and supply curve S,what should the government do to internalize the externality?

A) impose a tax of $2.50 per unit
B) reduce the market output level by approximately 39 units
C) impose a tax of $350 per period
D) impose a tax of $7.00 per unit
E) impose a tax of $175 per period