Your neighbor likes to blast 1970's rock music and the louder the better. The loud music imposes a cost on you because it disrupts your study of economics. Let D stand for the volume of his music in decibels, B for his benefits and C for your costs, where B and C are in dollars. For any given volume, D, your neighbor's benefit is and your cost is . With an efficient Pigouvian tax, what noise level will your neighbor choose?

Question

Your neighbor likes to blast 1970's rock music and the louder the better. The loud music imposes a cost on you because it disrupts your study of economics. Let D stand for the volume of his music in decibels, B for his benefits and C for your costs, where B and C are in dollars. For any given volume, D, your neighbor's benefit is  and your cost is  . With an efficient Pigouvian tax, what noise level will your neighbor choose?

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The Answer of Your neighbor likes to blast 1970's rock music and the louder the better. The loud music imposes a cost on you because it disrupts your study of economics. Let D stand for the volume of his music in decibels, B for his benefits and C for your costs, where B and C are in dollars. For any given volume, D, your neighbor's benefit is  and your cost is  . With an efficient Pigouvian tax, what noise level will your neighbor choose?

Your Neighbor Likes to Blast 1970's Rock Music and the Louder