Practice Questions · 9708

Government Microeconomic Intervention

Original StepsToConquer questions written in CAIE style. These are practice questions, not past Cambridge examination questions.

Question 11 marks

Not finished

A factory' $s$ marginal external $cost$ at the socially efficient output is $12 per unit. If all other $costs$ are measured accurately, what per-unit tax best internalises the externality?

A. $0
$B$ . $6
$C$ . $12
$D$ . Equal to marginal social $cost$

Your answer

Select one answer1 mark

Predict the economic result before testing each option against the full causal chain.