Consider a Monopolist with a Private MC of $20 Per

question 2

Multiple Choice

Consider a monopolist with a private MC of $20 per unit who faces a demand curve of P = 100 - q.There is also a negative consumption externality in the market of $40 per unit.What is the most appropriate policy response if the government wishes to maximize surplus in the market.

• A)The government should implement a Pigovian tax of $40 on consumers.
• B)The government should implement a Pigovian tax of $40 levied on the monopolist.
• C)The government should subsidize production by $40 per unit.
• D)Either a or B

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Definitions:

Informal Elements

Components within an organization that are not officially documented or structured but contribute to the culture, such as norms, behaviors, and unwritten rules.

Organizational Development

A field of research, theory, and practice dedicated to expanding the knowledge and effectiveness of people to accomplish more successful organizational change and performance.

Informal Organization

The unofficial and less visible part of the system.

Organization

An entity comprising multiple people, such as an institution or an association, that has a particular purpose.