Asked by Sophia Colosimo on Jun 30, 2024
Verified
Refer to Figure 16.2. To force this firm to produce the ________ level of output, the government should ________ of $10.00 per car.
A) market; impose a tax
B) efficient; impose a tax
C) market; issue a subsidy
D) efficient; issue a subsidy
Efficient Level
The level of output where a firm or economy is maximizing its productivity and minimizing waste within its resources.
Tax
An obligatory financial contribution or different kind of levy enforced on an individual or entity by a government agency for the purpose of funding government activities and diverse public costs.
- Perceive the function of governmental regulation in mending market defects stemming from external influences.
- Review the impact of taxes and subsidies on organizational behaviors and the outcomes in economic markets.
- Evaluate the effect of specific taxes and subsidies on achieving efficient market outcomes.
Verified Answer
GM
Gabriela MonserratJul 01, 2024
Final Answer :
B
Explanation :
To achieve the efficient level of output, the government should impose a tax to correct for the negative externalities not accounted for in the market outcome. This aligns the private cost with the social cost, leading to a more socially optimal level of production.
Learning Objectives
- Perceive the function of governmental regulation in mending market defects stemming from external influences.
- Review the impact of taxes and subsidies on organizational behaviors and the outcomes in economic markets.
- Evaluate the effect of specific taxes and subsidies on achieving efficient market outcomes.
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