Figure 10-14 -Refer to Figure 10-14. Which of the Following Statements Is

question 476

Multiple Choice

Figure 10-14
-Refer to Figure 10-14. Which of the following statements is correct?

• A) To induce firms to internalize the externality in this market, the government should impose a tax measured by P2 - P0.
• B) To induce firms to internalize the externality in this market, the government should offer a subsidy measured by P2 - P0.
• C) To induce firms to internalize the externality in this market, the government should impose a tax measured by P2 - P1.
• D) There is no externality in this market.

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Definitions:

Business

Organized efforts by individuals or entities to produce and sell goods and services for profit.

Owner

An Owner is the individual or entity that legally holds the rights to possess, use, and dispose of property, assets, or a business.