Question: In discussing Figure the text states that the private equilibrium

In discussing Figure, the text states that the private equilibrium output, Q1, is inefficient. By definition, inefficiency is supposed to mean that everyone could be better off with a different allocation of resources. Does the subsidy shown in the diagram benefit everyone, including the taxpayer who pays to finance it? If not, what type of policy could be used that would benefit everyone?


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  • CreatedNovember 14, 2014
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