When a monopolist sells a good that creates a positive externality, is it possible that social welfare is maximized when the government introduces a tax (not a subsidy) for the good?
a) Taxing the monopolist for the good can lead to a decrease in the quantity of the good produced, reducing the negative externality and increasing social welfare.
b) Taxing the monopolist for the good can lead to higher prices for consumers, reducing overall consumption and potentially reducing the positive externality associated with the good.
c) Taxing the monopolist for the good can lead to increased government revenue, which can be used to fund programs that directly address the positive externality and increase social welfare.
d) Taxing the monopolist for the good can create inefficiencies in the market, potentially reducing social welfare and overall economic efficiency.