Here's a question for you: can a single Pigouvian tax reduce extemalities in multiple markets? It sounds strange, I know, but think about two complementary goods that each produce a negative externality. Consider, for example, gasoline and vehicle travel: the hurtling of gasoline produces smog and other pollution, and vehicle travel leads to trafc congestion. Let's explore this concept further in the abstract. Let goods A and B be complements, and then suppose that the production of both goods creates negative externality. Suppose further that only good A can be taxed (like, in the example above, how would you tax vehicle travel without odometer checks or other invasions of privacy?). I The inverse demand curve for good A is PA = 100 H_% - QA 41- PB, and the inverse demand curve for good B is P3 = 200 QB PA, where PA, PE, QA, and Q3 are the prices and quantities ofgoods A and B. I Also, suppose the private marginal cost curves for each good are M C A = 5 and M C B = 10. I The external cost for good A is 4, and the external cost for good B is 2. Describe whether a tax on good A increases the total social surplus across the markets for both goods. To do this, you will need to calculate the T85 both with and without the tax, and keep in mind that the price of each good appears in the demand curve for the other good. Show your work and describe your logic for full credit. Graphing the curves could be a huge help to you. [15 points]