The government is considering regulating a market that causes externalities on other producers and/or consumers. The government will charge a Pigouvian tax t equal to the marginal external cost of production: a) Indicate the benefit (reduction in deadweight loss) that occurs. due to the tax. b) What is the change in consumer surplus, producer surplus, government surplus and the overall social surplus from imposing the regulation?

2. A perfectly competitive market exists for almonds. Demand for almonds is Q= 200 – P where P is the price of almonds and Q is the total quantity of almonds. The private total Q? The production of almonds cost for the unregulated market is C 50 + 80Q + Q² First, solve for the 2 creates an externality where the total external cost is E = Pigouvian tax (per unit of output of almonds) that results in the social optimum. Suppose that one company, MegaAlmonds, becomes a monopolist in the production of almonds. What is the optimal tax that should be placed on the almonds in this case?

21 24 P 500 300 250 50 50 M DE J F CH 91 ABG K S MSB D 50 80 90 100 Q Which of the following would lead to the allocatively efficient outcome? A subsidy A price floor of $250 A quota of 90 units A tax

Market demand is MWTP= 50 - 2Q. Market supply is MC = 10 + 2Q. Each unit transacted results in a $4 external benefit. What is the deadweight loss from the perfectly competitive market without taxes or subsidies?