In the Figure Given Below,the Competitive Supply Curve of a Commodity

question 66

Multiple Choice

In the figure given below,the competitive supply curve of a commodity is given by S₁,the private marginal benefit curve is D₁,the marginal social benefit curve is D₂,and the MB_E curve reflects the marginal external benefits.
-From Figure 20-2,we can conclude that to help the market attain the efficient level of output,the government should:

• A)provide a subsidy of $8 per unit to the producer.
• B)impose a tax of $4 per unit of production.
• C)provide a subsidy of $3 per unit to the producer.
• D)impose a tax of $3 per unit of production.

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Definitions:

Money

A medium of exchange in the form of banknotes and coins, used to facilitate transactions for goods and services.

Primed

The psychological state of being prepped or conditioned to respond in a particular way to certain stimuli.

Participants

Individuals who take part in a study or experiment, contributing data through their involvement.

Encoding Specificity Principle

The theory that memory retrieval is most effective when the conditions at the time of encoding (such as environment or mental state) match those at the time of retrieval.