The Market Price for Good X Is $10

question 119

Multiple Choice

The market price for Good X is $10.75, and every time Good X is consumed it creates an external benefit of $3.00. Therefore, which of the following is correct?

• A) The social benefit of Good X is $13.75, a justification for the government to give buyers a $3.00 subsidy.
• B) The social benefit of Good X is $7.75, a justification for the government to give buyers a $3.00 subsidy.
• C) The social benefit of Good X is $7.75, a justification for the government to tax sellers $13.75 per unit.
• D) The social benefit of Good X is $13.75, a justification for the government to tax sellers $3.00 per unit.

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