Question

Please chose the correct answer, and explain why if possible. Thank you so much!

Question 4 1 pts From the perspective of economic efficiency, an unregulated market outcome in the presence of a negative externality results in O a price and quantity that are both too low. the correct price and quantity. a price and quantity that are both too high. a price that is too high and a quantity that is too low. a price that is too low and a quantity that is too high. Question 5 1 pts Pigovian taxes are taxes on Pigovies. O a type of tax designed to reduce corporate profits. a type of tax designed to reduce or eliminate negative externalities. None of these answers is correct. taxes levied on the rich. Question 6 1 pts When production and consumption of goods and services causes negative environmental impacts, imposing a Pigovian tax decreases social welfare. decreases economic efficiency. worsens the negative environmental impact. has no effect on efficiency. increases economic efficiency and social welfare.

Answer 1

1. Fourth option: price is too high and output is too low. This situation also results in deadweight loss. Either social costs is too high than the supply curve or demand curve is higher than the social benefits curve.
2. Third option: Pigovian taxes are designed to eliminate or reduce negative externalities. Such taxes are imposed to eliminate undesirable market outcomes
3. Fifth option. The purpose of pigovian taxes is to ensure desirable market outcome by removing negative externalities. So it increases economic efficiency and social welfare