Policymakers are provided data about the private and social benefits of a good being sold in the market. Quantity Private MB ($) Social MB ($) 6 6 8 7 4 6 8 9 2 0 4 2 What is the size of the externality? If the externality is positive, enter a positive number. If negative, make it a negative number. $ Given this data, policymakers must decide whether to address the associated externality with a subsidy or a tax. As their economic consultant, which of the two policy tools would you recommend? a tax a subsidy

Economics (MindTap Course List)
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ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information
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Policymakers are provided data about the private and social benefits of a good being sold in the market.
Quantity Private MB ($) Social MB ($)
6
6
8
7
4
6
8
9
2
0
4
2
What is the size of the externality? If the externality is positive, enter a positive number. If negative, make it a
negative number.
$
Given this data, policymakers must decide whether to address the associated externality with a subsidy or a tax. As their
economic consultant, which of the two policy tools would you recommend?
a tax
a subsidy
Transcribed Image Text:Policymakers are provided data about the private and social benefits of a good being sold in the market. Quantity Private MB ($) Social MB ($) 6 6 8 7 4 6 8 9 2 0 4 2 What is the size of the externality? If the externality is positive, enter a positive number. If negative, make it a negative number. $ Given this data, policymakers must decide whether to address the associated externality with a subsidy or a tax. As their economic consultant, which of the two policy tools would you recommend? a tax a subsidy
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