The drainage of waste products from the chemical factory, Ultra Chemicals, situated along the banks of the Misty River has led to the formation of a dead zone in the river that cannot support aquatic life. Without any government intervention, will the Ultra Chemical produce a socially optimal quantity? Why or why not? Explain your answer in 200 words or less with the help of suitable diagrams. Does Ultra Chemical impose a deadweight loss on the society? Explain in 100 words or less. Draw the diagram to show the deadweight loss to the society. How can a government intervene to improve upon the outcome from society’s point of view? Explain in 100 words or less. Diagram not needed.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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The drainage of waste products from the chemical factory, Ultra Chemicals, situated along the banks of the Misty River has led to the formation of a dead zone in the river that cannot support aquatic life.

  1. Without any government intervention, will the Ultra Chemical produce a socially optimal quantity? Why or why not? Explain your answer in 200 words or less with the help of suitable diagrams.
  2. Does Ultra Chemical impose a deadweight loss on the society? Explain in 100 words or less. Draw the diagram to show the deadweight loss to the society.
  3. How can a government intervene to improve upon the outcome from society’s point of view? Explain in 100 words or less. Diagram not needed. 

 

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