-The figure above illustrates the gasoline market.There is no external benefit from gasoline.If a pollution tax equal to the marginal external cost is imposed on gasoline,then the quantity of gasoline produced and consumed equals

Question

Quizplus · Accepted Answer

When a pollution tax equal to the marginal external cost is imposed, the quantity of gasoline produced and consumed will be at the socially optimal level, which is where the marginal social cost equals the marginal benefit. This is typically at the equilibrium quantity without the external cost, which is 10 million gallons in this context.

-The Figure Above Illustrates the Gasoline Market