Are the following statements TRUE OR FALSE? Explain in detail. (a) At the equilibrium people are willing to pay different prices for private goods and are willing to consume the same quantity. True or False? (b) Externality correcting Pigovian taxes should always be preferred to Pigovian subsidies. After all why should we subsidize the polluter? True or False? (c) Arrow’s impossibility theorem states that “even if some individuals have multi-peaked preferences there exists a voting mechanism which never creates a voting paradox” True or False
Are the following statements TRUE OR FALSE? Explain in detail.
(a) At the equilibrium people are willing to pay different prices for private goods and are willing to consume the same quantity. True or False?
(b) Externality correcting Pigovian taxes should always be preferred to Pigovian subsidies. After all why should we subsidize the polluter? True or False?
(c) Arrow’s impossibility theorem states that “even if some individuals have multi-peaked preferences there exists a voting mechanism which never creates a voting paradox” True or False
(d) Pigovian taxes and Pigovian subsidies both result in Pareto efficient level of production of externality creating aoutput but will have different distributional implications
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