Posted by **Kim** on Friday, April 9, 2010 at 12:06pm.

If the government wanted to encourage a monopoly to produce the socially efficient quantity, should it use a per-unit tax or a per-unit subsidy? Explain how this tax or subsidy would achieve the socially efficient level or output. Among the various interested parties—the monopoly firm, the monopoly’s consumers, and other taxpayers-who would support the policy and who would oppose it?

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