AP Microeconomics Unit 6 Practice Test

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If there is a negative externality associated with a firm’s production of a private good, which of the following is an action by government that would most likely move the market to an efficient outcome?

Place a per-unit tax on the firm Country C has more income inequality than A or B. The marginal social benefit is greater than the marginal social cost, and the problem can be corrected with a per- unit subsidy. Enjoying you neighbor’s flower garden

Correct Answer:

Place a per-unit tax on the firm

Explanation:

Correct answer: Place a per-unit tax on the firm

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