Home / Questions / Positive & Negative Externalities: Pollution (3) 0 Work as a group to solve the following ...
Positive & Negative Externalities: Pollution (3) 0 Work as a group to solve the following The supply of paper is described by the following equation Qs - 10,000 P where Os is tons of paper per year and is the price per ton The demand is described by the following equation: Qd = 360,000 - 2,000 P Pis the price per ton where Od is tons demanded per year and Because of the pollution associated with paper production, marginal external costs (MEC) of $10 are associated with each ton of paper. a. Assuming that paper is sold in a competitive market, what is the market price? b. How many tons of paper will be produced at that price? What is the efficient annual output of paper? d. How can a corrective tax achieve efficiency? e. What is the amount of tax revenue collected by the government? Show your solution graphically (as well as mathematically. Identify your final group answer with the subject "Final Response".
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