The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, what is the amount, including the subsidy, that suppliers keep per gallon?

Which of the following statements is true?

a. Competitive markets result in the socially efficient price and quantity when externalities exist. b. Command-and-control regulations set an environmental goal and dictate how the goal will be achieved. c. Economists prefer command-and-control regulations to incentive-based pollution programs. d. An effluent tax is a tax imposed on rich people.

The derived demand for an input decreases when

A. the price of the input increases. B. the price of the output increases. C. the price of the input decreases. D. the price of the output decreases.