The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the efficient level of output
A) is achieved.
B) can be achieved by giving paper producers a subsidy.
C) can be achieved by imposing a Pigovian tax on paper producers.
D) cannot be achieved.
C
You might also like to view...
If each of us relied exclusively on the market to determine what to buy, we would probably end up with few, if any:
a. streetlights. b. strawberries. c. CDs. d. raincoats. e. televisions.
Before Walmart's entry into the retail pharmacy business which drove down prices, existing pharmacies
a. were operating efficiently, so this is an example of predatory pricing. b. were colluding on price, so this is an example of a contestable market. c. were not operating as efficiently as afterwards, so this is not a case of predatory pricing. d. did not advertise but were forced to do so by the new competition.