Suppose That Candy Producers Create a Positive Externality Equal to $1

question 110

Multiple Choice

Suppose that candy producers create a positive externality equal to $1 per pound of candy. Further suppose that the government offers a $1-per-pound subsidy to the producers. What is the relationship between the equilibrium quantity and the socially optimal quantity of candy?

• A)The equilibrium quantity is greater than the socially optimal quantity.
• B)The equilibrium quantity is less than the socially optimal quantity.
• C)They are equal.
• D)There is not enough information to answer the question.

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Definitions:

BGM

Blood Glucose Monitoring, which is a way of testing the concentration of glucose in the blood.

SMBG Testing

Self-Monitoring of Blood Glucose, a method used by individuals with diabetes to check their blood sugar levels regularly at home.

Insulin Activity

The biological action of insulin in regulating glucose levels in the blood, including its onset, peak time, and duration.

Blood Glucose Levels

The concentration of glucose present in the blood, which is crucial for diagnosing and managing diabetes.