The graph shown displays a market with an externality. 
Which of the following statements is true? A tax of $12 per unit would eliminate deadweight loss.The government should use a subsidy to counteract this externality.If the government does not intervene, deadweight loss will be $0.
Definitions:
Visual Information
Data or knowledge received and processed by the visual system, usually pertaining to the sense of sight and visual perception.
Preoperational Children
A stage in Jean Piaget's theory of cognitive development, usually from ages 2 to 7, where children are beginning to engage in symbolic play but are not yet capable of logical thought.
Theory of Mind
The ability to attribute mental states—beliefs, intents, desires, emotions—to oneself and others, and to understand that others have beliefs and perspectives different from one's own.
Passive Sentences
Sentences in which the subject receives the action, often characterized by the use of "by" to introduce the doer.
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