Q=100-P Costs $6 to purchase a pack of cigarettes each pack smoked does $6 worth of health damage and $5 worth of secondhand health damage All consumers are aware of these costs 1. Due to an introduction of a hyper-effective tobacco fertilizer, the cost of producing a pack of cigaretts decreases to $1. How does this affect the level of smoking and the level of social loss? 2. suppose the government decides to pursue a Pigovian solution to eliminte social loss. What sort of of tax or subsidy would they implement and what is the resulting quantity of cigarette packs purchased? 3. In the case of the Coase Theorem, it is said that the socially efficient level of smokeing will occur without government intervention. how are property rights established and why might the Coase Theorem not apply in this setting?
Q=100-P
Costs $6 to purchase a pack of cigarettes
each pack smoked does $6 worth of health damage and $5 worth of secondhand health damage
All consumers are aware of these costs
1. Due to an introduction of a hyper-effective tobacco fertilizer, the cost of producing a pack of cigaretts decreases to $1. How does this affect the level of smoking and the level of social loss?
2. suppose the government decides to pursue a Pigovian solution to eliminte social loss. What sort of of tax or subsidy would they implement and what is the resulting quantity of cigarette packs purchased?
3. In the case of the Coase Theorem, it is said that the socially efficient level of smokeing will occur without government intervention. how are property rights established and why might the Coase Theorem not apply in this setting?
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