In the production of a product, a negative external effect arises. This means that the total marginal cost of manufactur
Posted: Wed Mar 09, 2022 8:28 am
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?
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?