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29 Sep 2019
Suppose that the Private Cost of producing a good is given by the equation Q = 3.1P - 14.6, but the Social Cost of producing the good is given by Q = 3.1P - 29.5. The government would like to correct this externality by imposing either a tax or subsidy for each unit produced.
How much should the government tax/subsidize the production of this good to correct the externality?
Important Note: If you find that a subsidy would correct the externality, then you should enter in a positive answer. If you find that a tax would correct the externality, then you should enter in a negative answer. As always, round your answer to two decimal places.
Suppose that the Private Cost of producing a good is given by the equation Q = 3.1P - 14.6, but the Social Cost of producing the good is given by Q = 3.1P - 29.5. The government would like to correct this externality by imposing either a tax or subsidy for each unit produced.
How much should the government tax/subsidize the production of this good to correct the externality?
Important Note: If you find that a subsidy would correct the externality, then you should enter in a positive answer. If you find that a tax would correct the externality, then you should enter in a negative answer. As always, round your answer to two decimal places.
Nusrat FatimaLv10
29 Sep 2019
