The graph illustrates the unregulated market for uranium. The mines dump their waste in a river that runs through a small town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the uranium (that is, the marginal social cost of producing the uranium is double the marginal private cost). Suppose that no one owns the river and that the government levies a pollution tax. Draw a point to show marginal social cost if production is 200 tons. Draw the MSC curve and label it. Draw an arrow at the efficient quantity that shows the marginal external cost. The tax per ton of uranium that achieves the efficient quantity of pollution is $. 1800- 1600- 1400- 1200- 1000- 800- 600- 400- 200- Price and cost (dollars per ton) 50 100 atitus (t 150 200 S D 250 Q O
The graph illustrates the unregulated market for uranium. The mines dump their waste in a river that runs through a small town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the uranium (that is, the marginal social cost of producing the uranium is double the marginal private cost). Suppose that no one owns the river and that the government levies a pollution tax. Draw a point to show marginal social cost if production is 200 tons. Draw the MSC curve and label it. Draw an arrow at the efficient quantity that shows the marginal external cost. The tax per ton of uranium that achieves the efficient quantity of pollution is $. 1800- 1600- 1400- 1200- 1000- 800- 600- 400- 200- Price and cost (dollars per ton) 50 100 atitus (t 150 200 S D 250 Q O
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.5P
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The graph illustrates the unregulated market for uranium. The mines
dump their waste in a river that runs through a small town.
The marginal external cost of the dumped waste is equal to the marginal
private cost of producing the uranium (that is, the marginal social cost of
producing the uranium is double the marginal private cost).
Suppose that no one owns the river and that the government levies a
pollution tax.
Draw a point to show marginal social cost if production is 200 tons.
Draw the MSC curve and label it.
Draw an arrow at the efficient quantity that shows the marginal external
cost.
t
The tax per ton of uranium that achieves the efficient quantity of
pollution is $.
6
...
Oll
y
&
7
O
*
8
O
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9
1800
1600-
1400-
1200-
1000-
800-
600-
400-
200-
0-
0
✓
Price and cost (dollars per ton)
100 150
Quantity (tons per week)
>>> Draw only the objects specified in the question.
10
0
50
р
S
200
D
250
Next
38
Q
5 US
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