Suppose the market for oranges is perfectly competitive and unregulated.Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges.Suppose Q_D = 1000 - 100P and Q_S= -100 + 100P.The price that suppliers would receive after they paid the optimal tax would be A) 4 B) 4.5 C) 5 D) 5.5

Question

Quizplus · Accepted Answer

The optimal tax is $1 per bushel, so the price that suppliers would receive after they paid the tax would be $5.

Suppose the Market for Oranges Is Perfectly Competitive and Unregulated