The graph directly below depicts the production of oil from the Gulf of Mexico, with market demand, MEC, MSC, and MPC all drawn on the figure. The X axis defines barrels of oil pumped from the gulf. A. Suppose this market is unregulated. How much lower is the market price compared to the price at the socially optimal outcome? a. 3 b. 4 c. 7 d. None of the above B. What should a tax on barrels of oil drilled be set equal to in this problem to "correct" the market? a. 10 b. 7 c. 3 d. None of the above
The graph directly below depicts the production of oil from the Gulf of Mexico, with market demand, MEC, MSC, and MPC all drawn on the figure. The X axis defines barrels of oil pumped from the gulf. A. Suppose this market is unregulated. How much lower is the market price compared to the price at the socially optimal outcome? a. 3 b. 4 c. 7 d. None of the above B. What should a tax on barrels of oil drilled be set equal to in this problem to "correct" the market? a. 10 b. 7 c. 3 d. None of the above
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The graph directly below depicts the production of oil from the Gulf of Mexico, with market demand, MEC, MSC, and MPC all drawn on the figure. The X axis defines barrels of oil pumped from the gulf.
A. Suppose this market is unregulated. How much lower is the market price compared to the price at the socially optimal outcome?
a. 3
b. 4
c. 7
d. None of the above
B. What should a tax on barrels of oil drilled be set equal to in this problem to "correct" the market?
a. 10
b. 7
c. 3
d. None of the above
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