If a good has an external benefit, efficiency can be achieved by
A) leaving the market unregulated.
B) monopolizing the market.
C) offering a private subsidy on the good equal to the external benefit.
D) imposing a tax on the good equal to the external benefit.
Question 2
The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if there were a decrease in her monthly dining out budget?
A) It would bend toward the origin, becoming more convex.
B) It would bend away from the origin, becoming more concave.
C) It would shift rightward and not change its slope.
D) It would shift leftward and not change its slope.
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