-Suppose That Production of the Product in Figure 14-2 Imposes

question 81

Multiple Choice

-Suppose that production of the product in Figure 14-2 imposes a cost on society of $7.00 per unit.If the free market equilibrium is at the intersection of demand curve D and supply curve S,what should the government do to internalize the externality?

• A)impose a tax of $2.50 per unit
• B)reduce the market output level by approximately 39 units
• C)impose a tax of $350 per period
• D)impose a tax of $7.00 per unit
• E)impose a tax of $175 per period

---

Definitions:

Batesian Mimicry

A form of mimicry where a harmless species evolves to imitate the warning signals of a harmful species to deter predators.

Resource Partitioning

Mechanism that increases the number of niches by apportioning the supply of a resource such as food or living space between species.

Asian Rice Paddy

Waterlogged fields where rice is grown, typically found in Asian countries, integral for rice cultivation.

Predator-prey Cycle

The dynamic, cyclical relationship between predators and their prey, where each affects the other's population size.