The Following Graph Shows Equilibrium in a Market in the Presence

question 65

Multiple Choice

The following graph shows equilibrium in a market in the presence of an externality. If technology is fixed, the discrepancy between the market output and the efficient level of output is eliminated by______.​ ​
Figure 17.2

• A)subsidizing production of the good by $10 per unit
• B)taxing the firm producing the good $10 per unit​
• C)using a quota system to restrict production to 160 units.
• D)subsidizing production of the good by $5 per unit​
• E)letting the private market operate freely​

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