the social optimum can be reached 42017 Print Assignment Price Supply 8125 $110
ID: 1130144 • Letter: T
Question
the social optimum can be reached 42017 Print Assignment Price Supply 8125 $110 $89 a1 Social value Demand 58 73 94 Quantity MCR Refer to Figure 10-19. The social optimum can be reached if a. a subsidy of $36 is applied to each unit of the good. b. a subsidy of $23 is applied to each unit of the good. c a tax of $23 is applied to each unit of the good. d. a tax of $15 is applied to each unit of the good. Practice Question 3: Chapter ma2peo8r, Section.101, Problem 029 (ID: 029.10.1-MC - MANK0By 3. Chapter ma2pe08r, Section.101, Problem 029 (029.10.1-MC-MANK08) Figure 10-4Explanation / Answer
This is a case of positive externalities. Private benefit is less than social value or benefit. Hence, government must provide subsidy to producer to increase aggregate output.
Government must provide a subsidy $ 36 per unit of the good. ( $125 -$89)
Thus, right answer is (A)
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