Consider the market for Dragonfire hot sauce sold in the US. The act of processing the chili peppers into the sauce creates a strong offensive odor in are surrounding the Dragon fire factory. As a result the marginal social cost and the marginal private cost of producing the sauce diverge, as seen on the graph below. $10 MSC MPC D 0 5 10 15 20 25 30 35 Quantity of Bottles (Thousands) a) In the absence of government intervention, how many bottles of hot sauce are produced in this market? (Please enter your answer with out the "thousands", ex. if the answer is 35,000, enter 35) b) What is the efficient amount of hot sauce produced in this market? c) If the government were to levy a tax on hot sauce. What is the appropriate per bottle tax that would lead this market to the efficient outcome? (Please enter only the value of the tax, do not add "per bottle" or "each" or anything like that) Price per Bottle $9 $8 $7 $6 S $4 $3 $2 SI

Consider the market for Dragonfire hot sauce sold in the US. The act of processing the chili peppers into the sauce creates a strong offensive odor in are surrounding the Dragon fire factory. As a result the marginal social cost and the marginal private cost of producing the sauce diverge, as seen on the graph below. $10 MSC MPC D 0 5 10 15 20 25 30 35 Quantity of Bottles (Thousands) a) In the absence of government intervention, how many bottles of hot sauce are produced in this market? (Please enter your answer with out the "thousands", ex. if the answer is 35,000, enter 35) b) What is the efficient amount of hot sauce produced in this market? c) If the government were to levy a tax on hot sauce. What is the appropriate per bottle tax that would lead this market to the efficient outcome? (Please enter only the value of the tax, do not add "per bottle" or "each" or anything like that) Price per Bottle $9 $8 $7 $6 S $4 $3 $2 SI

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter13: Positive Externalities And Public Goods

Section: Chapter Questions

Problem 24P: Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the...

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