(Figure: Market for Logs) Suppose that the government is trying to decide between taxes and quotas in order to limit the use of forest wood. Refer to the graph that shows the market for logs of forest wood. The government has set a goal of reducing the consumption of forest wood to 8,000 logs per month.
(a) What is the amount of the tax (per 1000 logs) that would achieve the goal?
(b) If the government sets a quota at 8,000 logs per month, how much will consumers end up paying?

Question

(Figure: Market for Logs) Suppose that the government is trying to decide between taxes and quotas in order to limit the use of forest wood. Refer to the graph that shows the market for logs of forest wood. The government has set a goal of reducing the consumption of forest wood to 8,000 logs per month.
  (a) What is the amount of the tax (per 1000 logs) that would achieve the goal?
(b) If the government sets a quota at 8,000 logs per month, how much will consumers end up paying?

Quizplus · Accepted Answer

The Answer of (Figure: Market for Logs) Suppose that the government is trying to decide between taxes and quotas in order to limit the use of forest wood. Refer to the graph that shows the market for logs of forest wood. The government has set a goal of reducing the consumption of forest wood to 8,000 logs per month.
  (a) What is the amount of the tax (per 1000 logs) that would achieve the goal?
(b) If the government sets a quota at 8,000 logs per month, how much will consumers end up paying?

(Figure: Market for Logs) Suppose That the Government Is Trying