When farmers grow apples, there are a number of external costs. In particular, apples not sold or picked in a timely fashion spoil and become rotten and thus generate methane gas. If the marginal external cost is $10 per bushel of apples, and the government imposes a tax of $20 per bushel of apples, then at the new equilibrium price and quantity of apples:

Question

Quizplus · Accepted Answer

If the government imposes a tax that is twice the marginal external cost, it will result in a higher cost per unit for apple farmers, leading to a decrease in the production of apples. This will result in too few apples being picked at the new equilibrium price and quantity of apples.

When Farmers Grow Apples, There Are a Number of External