In the production of a product, a negative external effect
arises. This means that the total marginal cost of
manufacturing companies
ππΆπ = π
differs from society's marginal cost, which is
ππΆπ = 4π.
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
π = 50 βπ
how large should the tax be for the companies to produce the amount
of the product that
society wants?
In the production of a product, a negative external effect arises. This means that the total marginal cost of manufactur
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