In a market for chemicals, the demand function is P = 200 – Q. The private marginal cost for the chemicals produ cers is MCP = 50 + Q. Pollution generated during the production process causes external marginal cost for the society equal to MCE = 3Q. 4. (a) What specific tax would resultin a competitive market producing the socially optimal quantity of chemicals? Instead of taxation, what else can the government do to make sure that the market will work itself out to achieve the socially optimal output? (b)

In a market for chemicals, the demand function is P = 200 – Q. The private marginal cost for the chemicals produ cers is MCP = 50 + Q. Pollution generated during the production process causes external marginal cost for the society equal to MCE = 3Q. 4. (a) What specific tax would resultin a competitive market producing the socially optimal quantity of chemicals? Instead of taxation, what else can the government do to make sure that the market will work itself out to achieve the socially optimal output? (b)

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 7SQ

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