Suppose that you are an economic-policy advisor. Environmental groups are pressuring you toimplement the highest-possible carbon tax, whileindustry groups are pressuring you to implementno carbon tax at all. Both argue that their positionmakes more sense economically. Explain to themwhat the most-efficient tax level will be, and whythere are costs to setting the tax too high or toolow

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Chapter8: Application: The Cost Of Taxation
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Suppose that you are an economic-policy advisor. Environmental groups are pressuring you to
implement the highest-possible carbon tax, while
industry groups are pressuring you to implement
no carbon tax at all. Both argue that their position
makes more sense economically. Explain to them
what the most-efficient tax level will be, and why
there are costs to setting the tax too high or too
low

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