APFIVE Government Intervention and Deadweight Loss
All of the following statements about government intervention to reduce deadweight loss are true EXCEPT:
A
Government policies such as taxes and subsidies are employed to move market outcomes closer to the socially optimal level where MSB equals MSC.
B
Implementing a per unit tax on a good with positive externalities effectively reduces deadweight loss by internalizing external benefits.
C
In the presence of negative externalities, a per unit tax can align the marginal private cost with the marginal social cost by shifting the supply curve upward.
D
Corrective interventions are aimed at minimizing the deadweight loss that results from market inefficiencies.
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