Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

it is economics (2) Externalities {10 pts) Like under Question (1), assume the private demand curve (private marginal utility) for WWW-3W W P stands for

it is economics

image text in transcribed
(2) Externalities {10 pts) Like under Question (1), assume the private demand curve (private marginal utility) for WWW-3W W P stands for the price of gasoline and Q for vehicles miles driven. a) Calculate the private equilibrium b) Now assume the external cost instead of being constantly 50 per unit, it always equals 20% of the private MC. What is the socially optimal quantity? c) What is the DWL of the private solution? d) Assume the city were to impose a Pigou Tax on the supply side. What is the tax (ES/unit) at the privately optimal quantity? What is the tax ($lunit) at the socially optimal quantity

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Marketing And Export Management

Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr

8th Edition

1292016922, 978-1292016924

Students also viewed these Economics questions