Use the Following to Answer Question

question 22

Multiple Choice

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 - P_2.
• B)providing a per-unit subsidy of P₀ - P_2.
• C)providing a per-unit subsidy of P₁ - P_2.
• D)leaving the quantity at the initial private market-clearing quantity and price.

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Definitions:

Commanding General

A high-ranking military officer in charge of a particular command or operation, responsible for strategic planning and executing military operations.

United States Army

The land service branch of the U.S. Armed Forces, responsible for land-based military operations.

Inflation

The rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of currency.