Carbon tax debate heats up in Montpelier VTVermonters are debating the pros and cons of a state carbon tax-a new tax on gasoline, heating oil, and other fossil fuels sold inthe state. Backers say the tax revenue would be used to cut other taxes and increase energy efficiency.Source: Watchdog.org, December 3, 2015Draw a graph of the market for gasoline in Vermont to show the "pro" and the "con" for a state carbon tax.The graph shows the market for gasoline in Vermont when there is no carbon tax on gasoline.Draw a point that shows the market equilibrium. Label it 1Transport that uses gasoline creates emissions pollution, and the quantity of emissions increases as the amount of gasoline usedincreases. Draw the marginal social cost curve and label the curve.Draw a point at the efficient market outcome. Label it 2.Now suppose the government places a carbon tax on gasoline equal to the marginal external cost at the efficient quantity oftransport.Draw an arrow at the efficient quantity to show the tax that delivers the efficient outcome.esc1062*3$4A25%Oll6&7O*8O4.504,003.50-3.00-2.502.001.50-0.500.00€(Price and cost (dollars per gallon)9100 200 300 400 500 600Quantity (millions of gallons)>>> Draw only the objects specified in the question.1OS=MC1'D=MB700 800QG

Supply represented by marginal cost which implies the positive relation between price and quantity.…

on tax debate heats up in Montpelier VT monters are debating the pros and cons of a state carbon tax-a ne- tate. Backers say the tax revenue would be used to cut other taxes va graph of the market for gasoline in Vermont to show the "pro" an graph shows the market for gasoline in Vermont when there is no c w a point that shows the market equilibrium. Label it 1. nsport that uses gasoline creates emissions pollution, and the quant reases. Draw the marginal social cost curve and label the curve. raw a point at the efficient market outcome. Label it 2. ow suppose the government places a carbon tax on gasoline equal to ansport. raw an arrow at the efficient quantity to show the tax that delivers the

on tax debate heats up in Montpelier VT monters are debating the pros and cons of a state carbon tax-a ne- tate. Backers say the tax revenue would be used to cut other taxes va graph of the market for gasoline in Vermont to show the "pro" an graph shows the market for gasoline in Vermont when there is no c w a point that shows the market equilibrium. Label it 1. nsport that uses gasoline creates emissions pollution, and the quant reases. Draw the marginal social cost curve and label the curve. raw a point at the efficient market outcome. Label it 2. ow suppose the government places a carbon tax on gasoline equal to ansport. raw an arrow at the efficient quantity to show the tax that delivers the

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter4: Supply And Demand: An Initial Look

Section: Chapter Questions

Problem 4DQ

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