Use the figure below to answer the following questions.

Figure 16.2.1
-Refer to Figure 16.2.1. The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve. If a constant per unit tax is imposed that generates an efficient allocation of resources, then consumers pay a per unit price of
A)zero.
B)P₁.
C)P₂.
D)P₃.
E)P₄.

Question

Use the figure below to answer the following questions.
  
Figure 16.2.1
-Refer to Figure 16.2.1. The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve. If a constant per unit tax is imposed that generates an efficient allocation of resources, then consumers pay a per unit price of
A)zero. 
B)P₁. 
C)P₂. 
D)P₃. 
E)P₄.

Quizplus · Accepted Answer

The efficient allocation occurs where the marginal social cost curve intersects the market demand curve. At this point, the price consumers pay is P₃.

Use the Figure Below to Answer the Following Questions