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Loraine Loraine
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8 years ago
Suppose unregulated production of pesticides results in an equilibrium price and quantity of $400 and 1,000 tons per day, respectively, and a marginal external cost of $10 a ton.
a.    If the government were to eliminate the external cost by using pollution charges, what should the pollution charge be set at?
b.    If the government were to eliminate the external cost by using taxes, what should the tax equal?
c.    Would the government actions described above affect the quantity of pesticides produced? If yes, how? If no, why not?
Textbook 
Essential Foundations of Economics

Essential Foundations of Economics


Edition: 7th
Authors:
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Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible.
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Chimelo46Chimelo46
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8 years ago
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8 years ago
The textbook reference in your signature really helped me narrow it down.

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