4. Depending on whether there is an over-consumption or under-consumption, the government could choose to tax or subsidize the cost of solar roof panels to produce the socially optimal level of consumption. Depending on your answer to question 3, indicate whether a tax or a subsidy would be appropriate in this case. Describe the effect of the tax or subsidy on equilibrium price and quantity and illustrate it on your graph above.
4. Depending on whether there is an over-consumption or under-consumption, the government could choose to tax or subsidize the cost of solar roof panels to produce the socially optimal level of consumption. Depending on your answer to question 3, indicate whether a tax or a subsidy would be appropriate in this case. Describe the effect of the tax or subsidy on equilibrium price and quantity and illustrate it on your graph above.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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