Suppose the marginal external damage due to pollution varies with output according to the function, MC = 0.5Q. If the competitive equilibrium output is 150 and price is $10; and the socially optimum output is 120 and price is $15 then what should be the size of the specific tax used to control pollution to the socially desirable level? $75 $5 $7.5 $60 000

Suppose the marginal external damage due to pollution varies with output according to the function, MC = 0.5Q. If the competitive equilibrium output is 150 and price is $10; and the socially optimum output is 120 and price is $15 then what should be the size of the specific tax used to control pollution to the socially desirable level? $75 $5 $7.5 $60 000

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 29CTQ: Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant....

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