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QUESTION
A Pigouvian subsidy 1) cannot achieve an efficient equilibrium outcome 2) is a per-unit payment on a good that equals the marginal external benefit
A Pigouvian subsidy
1) cannot achieve an efficient equilibrium outcome
2) is a per-unit payment on a good that equals the marginal external benefit at the efficient equilibrium
3) achieves efficiency as long as it is set equal to the marginal external cost (MEC) at the competitive equilibrium level
4) lowers the marginal private benefit (MPB) vertically by the amount of the subsidy
