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AP® Microeconomics

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Moderate

Fire Protection Services in Mapleton Remedies

APMICR-K44NLL

The graph below shows the market for fire protection services in the village of Mapleton, which are provided by a private company on a subscription basis to households which pay an annual fee.

Currently, the market for fir protection services includes benefits to those who do not pay for them. Which of the following would be a remedy for producing a more efficient quantity of fire protection services?

I. Producer subsidy
II. Government provision
III. Consumer subsidy
IV. Producer tax

A

I and IV only

B

II only

C

I, II and III only

D

II and III only

E

I, III and IV only