13 12- 11 D = MSB 30 40 50 60 70 Paper (millions of tons per year) e graph above shows the supply, demand, and marginal social cost curves in the per market. There is a negative externality in the production of paper due to llution. regulate this externality optimally, the government would want to -- production dollars per ton. tax; 2 Price (dollars per ton a 4.

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter3: Economic Decision Makers
Section: Chapter Questions
Problem 3.12P
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Solve it correctly when you know complete solution not the wrong

S = MC
14
13
12
11
D = MSB
30
40
50
60
70
Paper (millions of tons per year)
The graph above shows the supply, demand, and marginal social cost curves in the
paper market. There is a negative externality in the production of paper due to
pollution.
To regulate this externality optimally, the government would want to
production
by
dollars per ton.
----
O tax; 2
O tax; we can't say
O subsidize; 1
O subsidize; 2
O tax; 1
Price (dollars per ton of pap
Transcribed Image Text:S = MC 14 13 12 11 D = MSB 30 40 50 60 70 Paper (millions of tons per year) The graph above shows the supply, demand, and marginal social cost curves in the paper market. There is a negative externality in the production of paper due to pollution. To regulate this externality optimally, the government would want to production by dollars per ton. ---- O tax; 2 O tax; we can't say O subsidize; 1 O subsidize; 2 O tax; 1 Price (dollars per ton of pap
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