Use the figure below to answer the following questions.

Figure 16.3.1
-Refer to Figure 16.3.1. The figure shows the marginal private benefit curve, the marginal social benefit curve, and the market supply curve. To promote an efficient quantity the government could grant a subsidy equal to
A)zero.
B)P₁.
C)P₃ - P₁.
D)P₄ - P₁.
E)P₂ - P₁.

Question

Use the figure below to answer the following questions.
  
Figure 16.3.1
-Refer to Figure 16.3.1. The figure shows the marginal private benefit curve, the marginal social benefit curve, and the market supply curve. To promote an efficient quantity the government could grant a subsidy equal to
A)zero. 
B)P₁. 
C)P₃ - P₁. 
D)P₄ - P₁. 
E)P₂ - P₁.

Quizplus · Accepted Answer

A subsidy equal to P₃ - P₁ would align the marginal private benefit with the marginal social benefit, promoting an efficient quantity.

Use the Figure Below to Answer the Following Questions