Figure 10-2 -Refer to Figure 10-2.Suppose That the Production of Soccer Balls

question 198

Multiple Choice

Figure 10-2

-Refer to Figure 10-2.Suppose that the production of soccer balls creates a social cost which is depicted in the graph above.If the government wanted to force the firm to internalize the cost of the externality,what action should it take?

• A)Impose a tax of $7.50 per soccer ball.
• B)Impose a tax of $7 per soccer ball.
• C)Offer a subsidy of $3 per soccer ball.
• D)Offer a subsidy of $2.50 per soccer ball.

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Definitions:

Unequal-variances Test

Statistical tests used when comparing two groups that are assumed not to have the same variance.

Student T-distributed

Pertaining to a probability distribution used in statistics for estimating population parameters when the sample size is small and population variance is unknown.

Population Variances

Measures of the spread or distribution of a set of data points in a population, quantifying the degree to which these points differ from the population mean.

Sample Variance

A measure of the dispersion or spread of a set of data points around their mean, calculated as the sum of the squared deviations from the mean, divided by the number of observations minus one.