Author Question: Refer to Figure 5-9. Suppose the government wants to use a Pigovian tax to bring about the efficient ... (Read 126 times)

jace · **on:** Jun 29, 2018

Refer to Figure 5-9. Suppose the government wants to use a Pigovian tax to bring about the efficient level of production. What should the value of the tax be?

A) (P1- P0 ) per unit of output B) P1 per unit of output
C) (P2- P0 ) per unit of output D) (P2- P1 ) per unit of output

Question 2

Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. Which of the following is true?

A) If the price of iced tea is 3, producers will sell 30,000 units of iced tea but this output will be economically inefficient.
B) If the price of iced tea is 3, consumers will purchase more than the economically efficient output.
C) Both 10,000 and 30,000 are economically inefficient rates of output.
D) If the price of iced tea is 3, the output will be economically efficient but there will be a deadweight loss.