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Roses confer many external benefits on society: the beauty they add to a room or garden, the wonderful aroma they give off, and so on.
Roses confer many external benefits on society: the beauty they add to a room or garden, the wonderful aroma they give off, and so on. Therefore, the market equilibrium quantity of roses is not equal to the socially optimal quantity. The following graph shows the demand for roses (their marginal private benefits), the supply of roses (the marginal private costs of producing them), and the marginal social benefits of roses, including both the marginal private benefits and external benefits. Which of the following policies could help the government achieve the efficient outcome? Check all that apply. Introduce emission taxes Implement tradable pollution permits 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 Offer a subsidy to producers equal to the vertical distance between the marginal private benefits curve and marginal social benefits curve
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