A Negative Externality Exists and Government Wants to Impose a Per-Unit

question 68

Multiple Choice

A negative externality exists and government wants to impose a per-unit tax in order to bring about the socially optimal output. To accomplish its objective, government must set the tax equal to marginal

• A)private cost.
• B)social benefit.
• C)external cost.
• D)social cost.
• E)private benefit.