A3) Consider production involving a positive extemality. Which one of the followingstatements is true?a) Without government intervention the market will produce excess supply.b) Marginal social cost is higher than marginal private cost.e) Marginal social benefit is less than marginal private benefit.d) A subsidy to producers could increase production to the socially optimum level.e) A Pigouvian tax could be imposed on the producer to achieve the socially optimumlevel of production.

An externality is said to occur when the consumption or production of a product incurs a cost or…

A3) Consider production involving a positive extemality. Which one of the following statements is true? a) Without govermment intervention the market will produce excess supply. b) Marginal social cost is higher than marginal private cost. c) Marginal social benefit is less than marginal private benefit. d) A subsidy to producers could increase production to the socially optimum level. e) A Pigouvian tax could be imposed on the producer to achieve the socially optimum level of production.

A3) Consider production involving a positive extemality. Which one of the following statements is true? a) Without govermment intervention the market will produce excess supply. b) Marginal social cost is higher than marginal private cost. c) Marginal social benefit is less than marginal private benefit. d) A subsidy to producers could increase production to the socially optimum level. e) A Pigouvian tax could be imposed on the producer to achieve the socially optimum level of production.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 10PAE

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