The figure below shows the market for water-skiing permits on Shuswap Lake in British Columbia. Every person who wishes to water ski must obtain a permit, which is valid for one day. Suppose that each water skier imposes a $4 negative externality on other people who use the lake. Price of ski permits ($) Sprivate 14 12 X 10 8 6 4 D private 10 20 30 40 50 60 70 80 90 100 20 18 6 16 2 0 Skiers (permits) per day a. The socially optimal level of water skiing is b. If there is no government intervention in this market, the deadweight loss from ignoring the negative externality would be $ permits. c.Suppose the government imposes a $12 tax on suppliers of water skiing permits. Compared to social optimum, the net (Click to select) in surplus from this tax is $ (Hint: The tax overcorrects for the negative externality.)

The figure below shows the market for water-skiing permits on Shuswap Lake in British Columbia. Every person who wishes to water ski must obtain a permit, which is valid for one day. Suppose that each water skier imposes a $4 negative externality on other people who use the lake. Price of ski permits ($) Sprivate 14 12 X 10 8 6 4 D private 10 20 30 40 50 60 70 80 90 100 20 18 6 16 2 0 Skiers (permits) per day a. The socially optimal level of water skiing is b. If there is no government intervention in this market, the deadweight loss from ignoring the negative externality would be $ permits. c.Suppose the government imposes a $12 tax on suppliers of water skiing permits. Compared to social optimum, the net (Click to select) in surplus from this tax is $ (Hint: The tax overcorrects for the negative externality.)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 40P: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in...

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