Consider the following model of a hypothetical market for MSW management services: MPB = 25 2Q
Question:
Consider the following model of a hypothetical market for MSW management services:
MPB = 25 − 2Q
MPC = 4 + Q
MEC = 0.5Q,
where Q is the number of trash containers per household per month.
a. Quantitatively determine the effect of the resource misallocation due to:
(i) The presence of the negative externality, and
(ii) The use of a flat fee pricing system in the presence of a negative externality.
b. Support your answer to part (a) with a graphical model.
c. Determine the dollar value of a waste-end charge that would restore efficiency to this market. Explain your answer intuitively.
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Step by Step Answer:
a i To find the effect of the negative externality on resource allocation the private competitive eq...View the full answer
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Related Book For 
Environmental Economics and Management Theory, Policy and Applications
ISBN: 978-1111826673
6th edition
Authors: Scott J. Callan, Janet M. Thomas
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