Price Supply (Private Cost) Social Value Demand (Private Value) 0 Q1 Q2 Q3 Q4 Quantity Refer to Figure 10-7. To internalize the externality in this market, the government should impose a tax on this product. produce the product itself. provide a subsidy for this product. forbid production.

Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 12QP
Question
Price
Supply
(Private Cost)
Social Value
Demand
(Private Value)
0
Q1
Q2 Q3 Q4
Quantity
Refer to Figure 10-7. To internalize the externality in this market, the government
should
impose a tax on this product.
produce the product itself.
provide a subsidy for this product.
forbid production.
Transcribed Image Text:Price Supply (Private Cost) Social Value Demand (Private Value) 0 Q1 Q2 Q3 Q4 Quantity Refer to Figure 10-7. To internalize the externality in this market, the government should impose a tax on this product. produce the product itself. provide a subsidy for this product. forbid production.
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