The fizzwizzle industry is perfectly competitive

Reference no: EM13695931

The fizzwizzle industry is perfectly competitive. Supply is given by QS = 10 + P, and demand is given by QD = 20 – P. In the production of fizzwizzles, firms pollute. The cost of this pollution is 2Q, where Q is the quantity of fizzwizzles produced.

(a) If the government places a tax on fizzwizzle production, what is the efficient tax?

(b) If the government places a quota on fizzwizzle production, what is the efficient level of output?

Reference no: EM13695931

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