Assume the social marginal benefit of remote-control drone flights is given by SMB = 200 - 2Q and the marginal cost is given by MC = 3Q + 50. The government wants to correct the negative externality associated with remote-control drone flights by taxing operators $20 per flight. What deadweight loss is associated with unrestricted remote-control drone flights if the proposed tax accurately reflects their marginal external costs?

Question

Quizplus · Accepted Answer

The Answer of Assume the social marginal benefit of remote-control drone flights is given by SMB = 200 - 2Q and the marginal cost is given by MC = 3Q + 50. The government wants to correct the negative externality associated with remote-control drone flights by taxing operators $20 per flight. What deadweight loss is associated with unrestricted remote-control drone flights if the proposed tax accurately reflects their marginal external costs?

Assume the Social Marginal Benefit of Remote-Control Drone Flights Is