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Figure 10-14 -Refer to Figure 10-14. Which of the Following Statements Is

question 413

Multiple Choice

Figure 10-14 Figure 10-14 -Refer to Figure 10-14. Which of the following statements is correct? A) To induce firms to internalize the externality in this market, the government should impose a tax measured by P<sub>2</sub> - P<sub>0</sub>. B) To induce firms to internalize the externality in this market, the government should offer a subsidy measured by P<sub>2</sub> - P<sub>0</sub>. C) To induce firms to internalize the externality in this market, the government should impose a tax measured by P<sub>2</sub> - P<sub>1</sub>. D) There is no externality in this market.
-Refer to Figure 10-14. Which of the following statements is correct?

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