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Economics 1st Edition by Dean Karlan,Jonathan Morduch
Edition 1ISBN: 978-0073511498Economics 1st Edition by Dean Karlan,Jonathan Morduch
Edition 1ISBN: 978-0073511498 Exercise 16
Figure 18P-6 shows the daily market for waterskiing permits on El Dorado Lake. Suppose each
skier (each permit) causes $4 of damage to the lake.
a. Calculate the loss of surplus if there is no government intervention in this market.
b. Suppose the government imposes a $12 tax on suppliers of ski permits. Compared to no intervention, what is the net surplus gain or loss from this tax?
c. What is the socially optimal level of water skiing?
skier (each permit) causes $4 of damage to the lake.
a. Calculate the loss of surplus if there is no government intervention in this market.
b. Suppose the government imposes a $12 tax on suppliers of ski permits. Compared to no intervention, what is the net surplus gain or loss from this tax?
c. What is the socially optimal level of water skiing?
Explanation
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Market condition:
Figure -1 illustrates...
Economics 1st Edition by Dean Karlan,Jonathan Morduch
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