Exhibit 17-1 -If Technology Is Fixed,the Discrepancy Between the Private Equilibrium and Private

question 30

Multiple Choice

Exhibit 17-1
-If technology is fixed,the discrepancy between the private equilibrium and the efficient level of output in Exhibit 17-1 is best eliminated by

• A)subsidizing the production of the good by $10 per unit
• B)taxing the firm producing the good by $10 per unit
• C)using a quota system to encourage production of at least 160 units of the good
• D)using a quota system to restrict production of the good to no more than 160 units
• E)letting the private market operate freely to determine output at equilibrium

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