Author Question: Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the ... (Read 109 times)

LCritchfi · **on:** Jul 1, 2018

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