How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially-optimal outcome?

A. An amount equal to P' minus P.

B. An amount equal to P'.

C. An amount equal to P.

D. An amount equal to the external cost.

Where can I find the poll?

To determine the correct answer, we need to understand the concept of corrective tax and its purpose.

Corrective taxes, also known as Pigovian taxes, are levies implemented by governments to correct negative externalities associated with certain market activities. These taxes are designed to internalize the external costs of these activities and bring the market outcome closer to the socially-optimal outcome.

To find the socially-optimal outcome, we look for the point where the marginal social cost (MSC) intersects with the marginal social benefit (MSB). This intersection represents the ideal level of production or consumption that maximizes social welfare.

Now, let's evaluate each of the given options:

A. An amount equal to P' minus P.
This option suggests that the corrective tax should be the difference between the equilibrium price (P) and the socially-optimal price (P'). However, this option only considers the price difference, ignoring the quantity or level of production.

B. An amount equal to P'.
This option proposes that the corrective tax should be equal to the socially-optimal price (P'). While it does consider the price, it fails to address the external costs associated with the market activity.

C. An amount equal to P.
This option implies that the correct tax should be equal to the equilibrium price (P). However, it does not consider the external costs or account for the socially-optimal price (P').

D. An amount equal to the external cost.
This option suggests that the corrective tax should be equal to the external cost caused by the market activity. It takes into account the specific external costs involved, making it the most accurate answer among the given options.

Therefore, the correct answer is option D. An amount equal to the external cost. Implementing a corrective tax equal to the external cost would help move the market from the equilibrium outcome to the socially-optimal outcome.