Considering the graph below, which of the following statements
is correct?

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Question: Considering the graph below, which of the following statements is correct? a. To induce firm…
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Question: Considering the graph below, which of the following statementsis correct?a. Toinduce firm...

a. To
induce firms to internalize the externality in this market, the
government should impose a tax measured by P2 – P0.
b. To
induce firms to internalize the externality in this market, the
government should offer a subsidy measured by P2 – P0.
c. To
induce firms to internalize the externality in this market, the
government should impose a tax measured by P2 – P1.
d. There is no externality in this market.

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