5. (Extra Credit). In question 1, suppose the tax revenue is used to fund a public good. The total value of the public good is
5. (Extra Credit). In question 1, suppose the tax revenue is used to fund a public good. The total value of the public good is equal to 1.5 times the amount of tax revenue. Find the per-unit tax t that maximizes total surplus (including the value of the public good as well as consumer and producer surplus in the dalgona market). (4 points extra credit)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
