Question

In the market for this good was in equilibrium at Q2 but the socially optimal output was Q1, the government could best remedy this misallocation of resources by legislating a tax on the consumption of the good.:

a) Subsidy
b) Price ceiling
c) Tax
d) Price floor

Answer 1

The government could best remedy the misallocation of resources by legislating a tax on the consumption of the good.

Step-by-step explanation:

The government could best remedy the misallocation of resources by legislating a tax on the consumption of the good.