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

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 18RQ: What is deflation?

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Question

100%

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