2. The market for plasticans is perfectly competitive. Market Supply is given by Q=2P and Market Demand is given by Q=396-2P. Each extra unit of plastican produced imposes a negative externality of $6. Implement the optimal Pigouvian tax/subsidy that implements the efficient outcome. What is the Producer Surplus in the equilibrium with the tax?

2. The market for plasticans is perfectly competitive. Market Supply is given by Q=2P and Market Demand is given by Q=396-2P. Each extra unit of plastican produced imposes a negative externality of $6. Implement the optimal Pigouvian tax/subsidy that implements the efficient outcome. What is the Producer Surplus in the equilibrium with the tax?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter7: Market Efficiency And Welfare

Section: Chapter Questions

Problem 5P

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