A market with a negative externality has marginal benefits mb = 60 – 0.15q, marginal private costs mc = 20 + 0.05q and marginal social costs msc = 20 + 0.10q. Calculate government revenues that would be raised by the optimal Pigouvian Tax

A market with a negative externality has marginal benefits mb = 60 – 0.15q, marginal private costs mc = 20 + 0.05q and marginal social costs msc = 20 + 0.10q. Calculate government revenues that would be raised by the optimal Pigouvian Tax

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter17: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

Problem 2QP

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Definition Definition Total cost incurred by the producers of goods and services as well as anyone who is impacted by the production of the commodity in terms of external cost.

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