Refer to the Above Supply and Demand Graph

question 106

Multiple Choice

Refer to the above supply and demand graph.In the graph,point A is the current equilibrium level of output of this product and point B is the optimal level of output from society's perspective.S is the supply curve without a tax and S_t is the supply curve with a tax.One solution to this externality problem is to:

• A) give consumers a subsidy of the amount FG.
• B) give producers a subsidy of the amount AB.
• C) tax producers by the amount DE.
• D) tax consumers by the amount EF.

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Definitions:

Moral Development

The process through which individuals develop proper attitudes and behaviors toward other people in society, based on social and cultural norms, rules, and laws.

Avoid Punishment

A behavior modification strategy motivated by the desire to evade consequences or negative outcomes.

Ethics Competency

The ability to understand, analyze, and apply ethical principles and values to one's professional behavior and decision-making processes.

Ethical Leadership

The practice of leading by demonstrating ethical behavior, serving as a model for integrity and fairness.