In the production of a product, a negative external effect arises. This means that the total marginal cost of manufactur

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answerhappygod
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In the production of a product, a negative external effect arises. This means that the total marginal cost of manufactur

Post by answerhappygod »

In the production of a product, a negative external effect
arises. This means that the total marginal cost of
manufacturing companies

𝑀𝐢𝑝 = 𝑄

differs from society's marginal cost, which is

𝑀𝐢𝑠 = 4𝑄.

To internalize the negative external effect, the state has decided
to introduce a tax
per unit produced. If the product's demand function is given
by

𝑄 = 50 βˆ’π‘

how large should the tax be for the companies to produce the amount
of the product that
society wants?
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