Refer to the Provided Supply and Demand Graph for a Product

question 48

Multiple Choice

Refer to the provided supply and demand graph for a product. In the graph, line S is the current supply of this product, while line S₁ is the optimal supply from the society's perspective. One solution to this externality problem is to

• A)give consumers a subsidy of the amount FG per unit.
• B)give producers a subsidy of the amount AB per unit.
• C)tax producers by the amount DE per unit.
• D)tax consumers by the amount EF per unit.

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Definitions:

Standard Deviation

A measure in statistics that quantifies the amount of variation or dispersion of a set of values from the mean (average) of the set.

Battery Life

The duration a battery can continue to provide power to a device before it needs recharging or replacement.

Creative Approach

Utilizing imagination or unconventional thinking to solve problems or generate original ideas.

Likely Consequences

Probable outcomes or effects that may result from specific actions or decisions.