Scenario 1: In the market for automobiles, the private cost of one compact car is $20,000 and the social cost of one compact car is $30,000. Would a tax or a subsidy be more appropriate for this externality? O a. Tax O b. Subsidy Oc. Neither
Scenario 1: In the market for automobiles, the private cost of one compact car is $20,000 and the social cost of one compact car is $30,000. Would a tax or a subsidy be more appropriate for this externality? O a. Tax O b. Subsidy Oc. Neither
Chapter8: Market Failure
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![Scenario 1: In the market for automobiles, the private cost of one compact car is $20,000 and the social cost of one compact car is $30,000.
Would a tax or a subsidy be more appropriate for this externality?
O a. Tax
O b. Subsidy
Oc. Neither
0
Scen
$11/
W
$1M
The
ION
b.External
C. Neither
STION 4
O c. an
O d. a private
efit
re good idea is $100M
HUUBES, S
an external benefit?
ur neighbor might experience he
world for the better, the private benefit of
ar is $20,000 and the social cost of one compact-
tend to stay away from neighborhoods that have a lot of burglar alarms is](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F53bbedac-6be3-4e7e-86f9-c986f9db2c85%2F2a2b6f7c-6418-4f74-a6a5-521dfd80656a%2F61j3iz_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Scenario 1: In the market for automobiles, the private cost of one compact car is $20,000 and the social cost of one compact car is $30,000.
Would a tax or a subsidy be more appropriate for this externality?
O a. Tax
O b. Subsidy
Oc. Neither
0
Scen
$11/
W
$1M
The
ION
b.External
C. Neither
STION 4
O c. an
O d. a private
efit
re good idea is $100M
HUUBES, S
an external benefit?
ur neighbor might experience he
world for the better, the private benefit of
ar is $20,000 and the social cost of one compact-
tend to stay away from neighborhoods that have a lot of burglar alarms is
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