Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into nvers and lakes and causes substantial environmental damage. The diagram to the right illustrates the situation in the toilet paper market. Suppose the government wants to use a Pigovian tax to bring about the efficient level of production. What should the value of the tax be? OA $(P₂P per ton of output OB. $P, per ton of output Oc. $(P₂P) per ton of output OD. $(P₁-P per ton of output Cost orbenen per unit Marginal Marginal social cost private cost 10₁ 10₂ 103 104 Quantity of pollution reduction Marginal Benefit

Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into nvers and lakes and causes substantial environmental damage. The diagram to the right illustrates the situation in the toilet paper market. Suppose the government wants to use a Pigovian tax to bring about the efficient level of production. What should the value of the tax be? OA $(P₂P per ton of output OB. $P, per ton of output Oc. $(P₂P) per ton of output OD. $(P₁-P per ton of output Cost orbenen per unit Marginal Marginal social cost private cost 10₁ 10₂ 103 104 Quantity of pollution reduction Marginal Benefit

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

What should the value of tax be. MC question

Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and
causes substantial environmental damage. The diagram to the right illustrates the situation in the toilet paper market.
Suppose the government wants to use a Pigovian tax to bring about the efficient level of production. What should the
value of the tax be?
OA. $(P₂P) per ton of output
OB. $P, per ton of output
Oc. $(P₂P) per ton of output
2
OD. $(PP per ton of output
Cost or benefit per unit
q
Marginal Marginal
social cost private cost
10₁
10₂ 103 104
Quantity of pollution reduction
Marginal
Benefit

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