1.When can the government increase social surplus with a (3pts)

a.Pigouvian tax?

b.Pigouvian subsidy?

c.A price floor (you will have to think about this one, answer not directly in the notes)?

2.Taxes always cause a deadweight loss, true or false? Explain your answer.

3.If markets are perfectly competitive, then the competitive equilibrium is always Pareto efficient, true or false? Explain your answer.