The following figure depicts the MPC and MSC of the robot factory production. The robot market is competitive and the market price is $340. Instead of a Pigouvian tax, the government is now considering implementing an enforced compensation from the factory to the nurses for the costs imposed. Based on this information, which one of the following statements is correct?
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Question

The following figure depicts the MPC and MSC of the robot factory production. The robot market is competitive and the market price is $340. Instead of a Pigouvian tax, the government is now considering implementing an enforced compensation from the factory to the nurses for the costs imposed. Based on this information, which one of the following statements is correct?

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Answer

The total compensation paid will be £6,400.

Answer

The nurses are worse off than they would be under the Pigouvian tax.

Answer

The factory’s profit would be the same as under the Pigouvian tax.

Answer

The factory’s marginal private cost now equals the marginal social cost.

Crowdly

The following figure depicts the MPC and MSC of the robot factory production. Th...

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