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Consider the market for Dragonfire hot sauce sold in the US. The act of processing the chili peppers into the sauce creates a strong offensive
Consider the market for Dragonfire hot sauce sold in the US. The act of processing the chili peppers into the sauce creates a strong offensive odor in are surrounding the Dragon fire factory. As a result the marginal social cost and the marginal private cost of producing the sauce diverge. as seen on the graph below. 510 % _ MSC Pnce per Bottle no% 0 5 10 15 20 25 30 35 Quantity of Bottles {Thousands) a) In the absence of government intervention, how many bottles of hot sauce are produced in this market? (Please enter your answer with out the \"thousands", ex. if the answer is 35,000, enter 35) b) What is the efficient amount of hot sauce produced in this market? c] If the gowvernment were to levy a tax on hot sauce. What is the appropriate per bottle tax that would lead this market to the efficient outcome? [Please enter only the value of the tax, do not add \"per bottle\" or "each\" or anything like that)
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