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Price social $18 Sinternal $14 $12 Dinternal 50 70 Quantity #4. To achieve the social optimum, the government could set a tax equal to per unit sold. a. $6 b. $4 c. $2 d. $3 S5

Price social $18 Sinternal $14 $12 Dinternal 50 70 Quantity #4. To achieve the social optimum, the government could set a tax equal to per unit sold. a. $6 b. $4 c. $2 d. $3 S5

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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**Graph Description:** The graph is a supply and demand chart that illustrates the relationship between price and quantity. It includes three lines: 1. **\( S_{\text{social}} \):** The social supply curve. 2. **\( S_{\text{internal}} \):** The internal supply curve. 3. **\( D_{\text{internal}} \):** The internal demand curve. The vertical axis represents the price, while the horizontal axis represents the quantity. There are key intersecting points marked on the graph: - The intersection of \( S_{\text{social}} \) with \( D_{\text{internal}} \) occurs at a price of $18 and a quantity of 50 units. - The intersection of \( S_{\text{internal}} \) with \( D_{\text{internal}} \) occurs at a price of $14 and a quantity of 70 units. Horizontal dashed lines are drawn at the $18, $14, and $12 price levels, intersecting the vertical lines at the quantities noted. **Question:** #4. To achieve the social optimum, the government could set a tax equal to ______ per unit sold. - a. $6 - b. $4 - c. $2 - d. $3 - e. $5 **Explanation:** The tax to achieve the social optimum is the difference between the prices at the social equilibrium ($18) and the internal equilibrium ($14). Therefore, the tax per unit should be $4.
Transcribed Image Text:**Graph Description:** The graph is a supply and demand chart that illustrates the relationship between price and quantity. It includes three lines: 1. **\( S_{\text{social}} \):** The social supply curve. 2. **\( S_{\text{internal}} \):** The internal supply curve. 3. **\( D_{\text{internal}} \):** The internal demand curve. The vertical axis represents the price, while the horizontal axis represents the quantity. There are key intersecting points marked on the graph: - The intersection of \( S_{\text{social}} \) with \( D_{\text{internal}} \) occurs at a price of $18 and a quantity of 50 units. - The intersection of \( S_{\text{internal}} \) with \( D_{\text{internal}} \) occurs at a price of $14 and a quantity of 70 units. Horizontal dashed lines are drawn at the $18, $14, and $12 price levels, intersecting the vertical lines at the quantities noted. **Question:** #4. To achieve the social optimum, the government could set a tax equal to ______ per unit sold. - a. $6 - b. $4 - c. $2 - d. $3 - e. $5 **Explanation:** The tax to achieve the social optimum is the difference between the prices at the social equilibrium ($18) and the internal equilibrium ($14). Therefore, the tax per unit should be $4.
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