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
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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
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C. Neither
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an external benefit?
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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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