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The use of plastic water bottles creates external costs as the result of plastic production, bottle transportation, litter, and waste disposal. Draw a correctly labeled
The use of plastic water bottles creates external costs as the result of plastic production, bottle transportation, litter, and waste disposal. Draw a correctly labeled graph showing how the market will determine the quantity of water bottles purchased. On the same graph, show the marginal external cost, the socially optimal quantity of water bottles, and the size of a Pigouvian tax that could be used to achieve the socially optimal quantity of water bottles.
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