Automobile production imposes a negative externality. The government imposes a per-unit tax on automobiles to reduce the impact of this externality. With this tax, at the market quantity, the Marginal Social Benefit of the last automobile produced is lower than the Marginal Social Cost of the last automobile produced. This tax: Group of answer choices is too low to implement the efficient quantity. is too high to implement the efficient quantity. implements the efficient quantity because in the market equilibrium with the tax we have Marginal Private Benefit equal to Marginal Private Cost. Need information on Marginal Private Benefit and Marginal Private Cost at the market equilibrium with the tax to determine if the market outcome is efficient.
Automobile production imposes a negative externality. The government imposes a per-unit tax on automobiles to reduce the impact of this externality. With this tax, at the market quantity, the Marginal Social Benefit of the last automobile produced is lower than the Marginal Social Cost of the last automobile produced. This tax: Group of answer choices is too low to implement the efficient quantity. is too high to implement the efficient quantity. implements the efficient quantity because in the market equilibrium with the tax we have Marginal Private Benefit equal to Marginal Private Cost. Need information on Marginal Private Benefit and Marginal Private Cost at the market equilibrium with the tax to determine if the market outcome is efficient.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Automobile production imposes a negative externality. The government imposes a per-unit tax on automobiles to reduce the impact of this externality. With this tax, at the market quantity, the Marginal Social Benefit of the last automobile produced is lower than the Marginal
Group of answer choices
is too low to implement the efficient quantity.
is too high to implement the efficient quantity.
implements the efficient quantity because in the market equilibrium with the tax we have Marginal Private Benefit equal to Marginal Private Cost.
Need information on Marginal Private Benefit and Marginal Private Cost at the market equilibrium with the tax to determine if the market outcome is efficient.
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