Suppose a firm producing roof shingles imposes a negative externality on the surrounding area due to the noxious fumes emitted from the plant.The private marginal cost,social marginal cost and marginal benefit associated with the production of the shingles are given by the following equations: MCp = 5 + 2Q MCs = 10 + 3Q MB = 50 - Q
What level of emissions tax (dollars per unit of output produced) would provide this firm with the incentive to
Produce at the allocatively efficient level of output?
A) $15
B) $25
C) $10
D) $40
E) $30
Correct Answer:
Verified
Q65: The banning of wood-burning stoves and fireplaces
Q80: An important reason that direct controls are
Q85: The diagram below shows the marginal costs
Q87: The diagram below shows the marginal costs
Q90: An emissions tax (imposed on each unit
Q100: Direct pollution controls are usually inefficient because
Q106: As a method of pollution control,tradable emissions
Q108: If emissions permits are traded freely between
Q112: Given that different firms typically have different
Q115: One possible strategy for efficiently addressing the
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents