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f. Explain why consuming the socially optimal level of production is Pareto efficient. In your explanation, refer to a graph in which you indicate the
f. Explain why consuming the socially optimal level of production is Pareto efficient. In your explanation, refer to a graph in which you indicate the change in consumer surplus, the change in total external cost, and the net gain to society. [No need to perform any numerical calculations] g. What is the Pigouvian tax rate that the government should impose on sand/salt mixture to achieve the socially optimal level of consumption? Illustrate your answer on a new graph. Recently, the State of Colorado relaxed the purchasing standards for sand to save money, which has resulted in the widespread use of a lower quality sand/salt mixture. The new sand/salt mixture purchased is cheaper, but contains a larger number of rocks, which are responsible for damages to vehicles. h. Illustrate the effect of this decision on a new graph. Make sure that you also indicate the level of consumption that you found in part a. By allowing private companies to purchase lower quality sand at lower price, did the State of Colorado increase or decrease the total external cost on drivers? Explain
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