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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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