Imagine a market where there is a positive externality in consumption. The private inverse demand function for the good is: D_private: P_D = 12 - Q_D. The social inverse demand function that incorporates the positive externality is: D_social: P_D = 24-Q_D. The social (and private) inverse supply function is: S_social: P_S = 3 + Q_S. A_ would eliminate the deadweight loss from the externality, which equals Select one: a. $12 per unit subsidy; $18. b. $12 per unit subsidy; $36. c. $12 per unit tax; $36. d. $6 per unit subsidy; $18. e. $12 per unit tax; $18.

Imagine a market where there is a positive externality in consumption. The private inverse demand function for the good is: D_private: P_D = 12 - Q_D. The social inverse demand function that incorporates the positive externality is: D_social: P_D = 24-Q_D. The social (and private) inverse supply function is: S_social: P_S = 3 + Q_S. A_ would eliminate the deadweight loss from the externality, which equals Select one: a. $12 per unit subsidy; $18. b. $12 per unit subsidy; $36. c. $12 per unit tax; $36. d. $6 per unit subsidy; $18. e. $12 per unit tax; $18.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section10.1: Externalities And Market Inefficiency

Problem 1QQ

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