Question
The following diagram depicts depicts the MPC and MSC of the robot factory production. The robot market is competitive and the market price is $340.
The following diagram depicts depicts the MPC and MSC of the robot factory production. The robot market is competitive and the market price is $340. Instead of a Pigouvian tax, the government is now considering implementing an enforced compensation from the factory to the nurses for the costs imposed. Based on this information, which of the following statements is correct?[More than one answer may be correct ] GIVE EXPLANATION FOR EACH OPTION
A. The factory's marginal private cost now equals the marginal social cost.
B .The required Pigouvian tax is $120 per robot.
C. The total compensation paid will be $6,400.
D. The nurses are worse off than they would be under the Pigouvian tax.
E. The factory's profit would be the same as under the Pigouvian tax.
F. Under the Pigouvian tax, the factory's surplus will be $6,400.
600 MSC 500 460 400 MPC Costs ($) 300 p = 340 260 200 100 0 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 OutputStep by Step Solution
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