Question
A study finds that the noise fromairplanesis harmful; hence, the government imposes a $25tax on the sale of everyairplane. This amount accurately accounts for the
A study finds that the noise fromairplanesis harmful; hence, the government imposes a $25tax on the sale of everyairplane. This amount accurately accounts for the external cost of the noise pollution. Before the corrective tax,airplane ticketsregularly soldfor $190. After the tax is in place, the market price forairplane ticketsrises to $200.
Because of the tax, the number ofairplane ticketssold willdecrease
.
The socially optimal price ofairplane ticketsis$.
The private market price is$.
A firm sellingairplane ticketsreceives$after it pays the tax.
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