Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to “Calculate,” you must show how you arrived at your final answer. Soybeans are produced and sold in a perfectly competitive market. The fertilizers used in soybean production generate a negative externality by seeping liquid contaminants into local rivers. (d) Assume instead of a lump-sum tax, the government decides to impose a per-unit tax equal to the marginal external cost. (i) On your graph in part (a), indicate the new market equilibrium quantity, labeled QN. (ii) What will happen to the deadweight loss? Explain.
Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and
Soybeans are produced and sold in a
(d) Assume instead of a lump-sum tax, the government decides to impose a per-unit tax equal to the marginal external cost.
(i) On your graph in part (a), indicate the new market
(ii) What will happen to the
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