Multiple Choice
Suppose that smoking creates a negative externality.What can the government do to equate the equilibrium quantity of cigarettes and the socially optimal quantity of cigarettes smoked?
A) impose a tax on cigarettes that is equal to the per-unit externality
B) offer a subsidy on cigarettes that is equal to the per-unit externality
C) impose a regulation limiting the number of cigarettes that each consumer can purchase
D) nothing
Correct Answer:
Verified
Correct Answer:
Verified
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