Use the following to answer question:
Figure: Marginal Private Benefits and Marginal Social Benefits
-(Figure: Marginal Private Benefits and Marginal Social Benefits) Use Figure: Marginal Private Benefits and Marginal Social Benefits.One way for the government to achieve this socially optimal level is by:
A) imposing a per-unit tax equal to P1 - P2.
B) providing a per-unit subsidy of P0 - P2.
C) providing a per-unit subsidy of P1 - P2.
D) leaving the quantity at the initial private market-clearing quantity and price.
Correct Answer:
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Figure: Marginal
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Figure: Marginal
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