Reference no: EM131091888

The State of Minnesota passed a law requiring paint manufacturers to recycle paint. Under current law, consumers of paint take unwanted paint to county or state recycling centers for disposal. Starting in the summer of 2014, consumers will be able to take unwanted paint to volunteer paint and hardware stores that will then send the paint to be recycled. Paint manufacturers will pay a hazardous waste fee to cover the cost of recycling. The state estimates this that 700,000 gallons of paint get recycled per year with another 500,000 gallons await recycling or end up illegally disposed.   The state estimates this program will cost paint manufacturers about $5 million per year.     In other states, the price of paint under such a program raises about $0.75 per gallon. 

a. Under what demand and supply conditions (if any) will these new rules cost completely shift the entire cost onto the manufacturers of paint?

b. Under what demand and supply conditions (if any) will these new rules fail to shift any of the cost onto the manufacturers of paint?

c. If the new rules cause the market price to consumers to rise by $0.75 cents per gallon, does that mean consumers bear the entire cost of these new rules? Explain.