Suppose That Meat Producers Create a Negative Externality

question 144

Multiple Choice

Suppose that meat producers create a negative externality.Further suppose that the government imposes a tax on the producers equal to the per-unit externality.What is the relationship between the equilibrium quantity and the socially optimal quantity of meat to be produced?

• A)They are equal.
• B)The equilibrium quantity is greater than the socially optimal quantity.
• C)The equilibrium quantity is less than the socially optimal quantity.
• D)There is not enough information to answer the question.

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