Asked by Caleigh Noelle on Jun 22, 2024
Verified
(Figure: MSB and MSC of Pollution) Use Figure: MSB and MSC of Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.Suppose pollution is unregulated.What level of emissions tax would move the level of pollution to the socially optimal level?
A) $100 per ton
B) $800 per ton
C) $500 per ton
D) $300 per ton
MSB
Marginal Social Benefit, referring to the additional benefit to society as a whole from consuming one more unit of a good.
MSC
MSC, or Marginal Social Cost, is the total cost to society of producing one additional unit of a good or service, including both private costs and externalities.
Pollution
The introduction of harmful substances or products into the environment, leading to adverse effects on living organisms and ecosystems.
- Identify and evaluate policies for correcting market failures due to externalities, including taxes, subsidies, and tradeable permits.
- Understand the marginal social cost and marginal social benefit within the context of externalities.
Verified Answer
Learning Objectives
- Identify and evaluate policies for correcting market failures due to externalities, including taxes, subsidies, and tradeable permits.
- Understand the marginal social cost and marginal social benefit within the context of externalities.
Related questions
Emissions Taxes and Tradable Emissions Permits Both Ensure That Any ...
Which Statement Is TRUE ...
(Scenario: Private and External Benefits)Use Scenario: Private and External Benefits ...
Suppose the Environmental Protection Agency Issues Pollution Permits in Order ...
Suppose the Government Levies a Corrective Tax on Firms That ...