Table 10-2 the Following Table Shows the Private Value, Private Cost, and Cost

question 115

Multiple Choice

Table 10-2
The following table shows the private value, private cost, and social value for a market with a positive externality.
-Refer to Table 10-2. How large would a subsidy need to be in this market to move the market from the equilibrium level of output to the socially-optimal level of output?

• A)$3
• B)$5
• C)$7
• D)$9

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Definitions:

Interest Rate

The portion of a total amount of money levied for borrowing it, usually represented as a yearly rate.

Amount

The total sum or quantity of something.

Annuity Payment

Regular periodic payments made to an annuitant or beneficiary, often fixed sums received from a retirement account or insurance policy.

Rate Of Interest

The percentage of a loan incurred as interest cost to the borrower, usually expressed as an annual rate.