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Refer to the Above Supply and Demand Graph

Question 93

Multiple Choice

  Refer to the above supply and demand graph. S<sub>1</sub> and D<sub>1</sub> represent the current market supply and demand, respectively. S<sub>2</sub> and D<sub>2</sub> represent the socially optimal supply and demand. One way that the government could shift supply to its socially optimal level is to: A)  Tax the sellers B)  Subsidize the buyers C)  Produce the product D)  Regulate the production of the good Refer to the above supply and demand graph. S1 and D1 represent the current market supply and demand, respectively. S2 and D2 represent the socially optimal supply and demand. One way that the government could shift supply to its socially optimal level is to:


A) Tax the sellers
B) Subsidize the buyers
C) Produce the product
D) Regulate the production of the good

Correct Answer:

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