A negative externality is present on a market,leading social marginal cost,
,to exceed marginal cost
As perceived by producers,which is also the supply curve in this competitive market.Inverse demand in the market is
The optimal corrective tax should be set to the difference between:
A) price and marginal cost at the competitive quantity.
B) price and social marginal cost at the competitive quantity.
C) price and marginal cost at the socially optimal quantity.
D) marginal social cost and marginal cost at the socially optimal quantity
Correct Answer:
Verified
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