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Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not
Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their marginal private benefits), the supply of parks (the marginal private costs of producing them), and the marginal social benefits of parks, including both the marginal private benefits and external benefit. Which of the following policies could help the government achieve the efficient outcome? Check all that apply. Implement tradable pollution permits Introduce emission taxes Offer a subsidy to producers equal to the vertical distance between the marginal private benefits curve and marginal social benefits curve Offer a subsidy equal to the price at the efficient outcome Offer a subsidy to consumers equal to the vertical distance between the marginal private benefits curve and the marginal social benefits curve
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