+1-415-670-9189
info@expertsmind.com
Describe a coasian solution to the externality problem
Course:- Macroeconomics
Reference No.:- EM13179066




Assignment Help
Assignment Help >> Macroeconomics

A paint factory produces paints, but in the process transmits chemicals into the soil below the factory. These chemicals taint the soil such that the farmer whose land abuts the paint factory property experiences a reduction in soil quality and hence crop output. Assume the paint company's marginal benefit (demand) curve for its output is the following:

300-Q. It's marginal cost of producing is as follows: MC = 20 + Q. The farmer experiences a reduction in farm profit that can be described with the following Marginal Damage curve: MD = 40 + 2Q.

1. What output level does the paint company choose?

2. What is the socially optimal level of output?

3. Describe a possible Coasian solution to the externality problem.

4. What corrective tax could the government set to achieve the socially optimal level of output from the paint company?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Macroeconomics) Materials
Explain how the Laws of Supply and Demand are illustrated in this graph. Assume that the government imposes a price floor of $12 in the E-Book market. Explain what would happe
when walmart locates in a smaller town, often the local retailers hardware, clothing and appliance are unable to successfully compete and are driver out of business why does
We have studied the CLI for both Windows and Linux. The real power in using commands comes with scripting. What are some repetitive tasks you can think of that could be done
One common good that consumers see elasticity in prices is gas. In looking at gas, we see it is a good that many people use. Do you find the increase in the cost of gas will
Recently submerged kingdom of Atlantis is populated through identical rational air breathing individuals. The king has decided to give an award to the industry whose product y
Suppose you only have access to the rates of savings and population growth data but do not have access to the data on years of schooling (the last column of the table), use
BUS 660- Determine patterns of economic growth or decline during this time period, and develop the most optimal forecasting model for the next 2 years. Note that you will ne
Describe this mean that the area affected by the natural disaster has experienced economic growthIllustrate what are the seen effects and what are the unseen effects.