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After adding tax on producers to eliminatethe DeadweightLoss 1 caused by negative consumption externality, Do we have newDeadweightLoss 2. If not, What is the pink

After adding tax on producers to eliminatethe DeadweightLoss 1 caused by negative consumption externality, Do we have newDeadweightLoss 2. If not, What is the pink triangle?

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Price of Market equilibrium cigarettes with tax = efficient equilibrium S, = social cost and private cost after tax S1 = private cost before tax EFFICIENT Negative externality = amount of the tax PMARKET imposed Market equilibrium without tax D1 = private benefit D2 = social benefit 0 QEFFICIENT MARKET Quantity of cigarettes (b) When there is a negative consumption externality a tax can bring about the efficient level of output

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