Suppose the market for oranges is perfectly competitive and ...

[LCritchfi]

Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated 1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. The optimal amount of environmental damage would be
 a. 0
  b. 40
  c. 450
  d. 500

Question 2

Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated 1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. The tax that would have to exist to achieve the socially optimal level of production would be
 a. 0
  b. .50
  c. 1
  d. 2

[Perkypinki]

Answer to Question 1

b

Answer to Question 2

c

[LCritchfi]

Excellent

[matt95]

Thanks for the timely response, appreciate it