Price of ski permits($) 20 Sprivate 14 12 10 X 8 6 10 20 30 40 50 60 70 80 90 100 18 16 4 2 0 Skiers (permits) per day private a. The socially optimal level of water skiing is permits. b. If there is no government intervention in this market, the deadweight loss from ignoring the negative externality would be $ c.Suppose the government imposes a $12 tax on suppliers of water skiing permits. Compared to social optimum, the net (Click to select) in surplus from this tax is $ . (Hint: The tax overcorrects for the negative externality.)
Price of ski permits($) 20 Sprivate 14 12 10 X 8 6 10 20 30 40 50 60 70 80 90 100 18 16 4 2 0 Skiers (permits) per day private a. The socially optimal level of water skiing is permits. b. If there is no government intervention in this market, the deadweight loss from ignoring the negative externality would be $ c.Suppose the government imposes a $12 tax on suppliers of water skiing permits. Compared to social optimum, the net (Click to select) in surplus from this tax is $ . (Hint: The tax overcorrects for the negative externality.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
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The figure below shows the market for water-skiing permits on Shuswap Lake in British Columbia. Every person who wishes to water ski must obtain a permit, which is valid for one day. Suppose that each water skier imposes a $4 negative externality on other people who use the lake.
Transcribed Image Text:Price of ski permits($)
20
Sprivate
14
12
X
10
8
6
Dprivate
18
16
4
2
0
10 20 30 40 50 60 70 80 90 100
Skiers (permits) per day
O
a. The socially optimal level of water skiing is
permits.
b. If there is no government intervention in this market, the deadweight loss from ignoring the negative externality would be $
c.Suppose the government imposes a $12 tax on suppliers of water skiing permits. Compared to social optimum, the net
(Click to select) in surplus from this tax is $
(Hint: The tax overcorrects for the negative externality.)
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