Socially optimal tax on private supply

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Suppose you are studying the recent rise in shale energy. You know the inverse private demand function for shale energy is P = 100 - Q_d. The private supply of shale energy is P = Q_s. However, shale energy can potentially lead to pollution. The marginal social cost curve is equal to P = 3Q_s.

What is the socially optimal tax on private supply?

Reference no: EM131198281

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