A Pigouvian Subsidy

question 13

Multiple Choice

A Pigouvian subsidy

• A) cannot achieve an efficient outcome
• B) is a per-unit payment on a good that is set equal to the marginal external benefit at Q_E
• C) achieves efficiency as long as it is set equal to the MEC at the competitive output level
• D) lowers the MPB vertically by the amount of the subsidy

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