What tax t should it set to achieve the social optimum

Assignment Help Financial Management

Reference no: EM131184851

The private marginal benefit associated with a product's consumption is PMB = 360 - 4Q and the private marginal cost associated with its production is PMC = 6P.

Furthermore, the marginal external damage associated with this good's production is MD = 2P.

To correct the externality, the government decides to impose a tax of T per unit sold. What tax T should it set to achieve the social optimum?

Reference no: EM131184851

Questions Cloud

What are two possible uses of these multiple modes : The implementation of mutex locks provided in this unit suffers from busy waiting. Some CPUs provide for more than two modes of operation. What are two possible uses of these multiple modes?

What is the optimal level of pollution cleanup : Suppose that the marginal cost of cleanup is constant at $12 per unit. What is the optimal level of pollution cleanup in each of the two regions?

What is the importance of the rehearsals : Before performers cast their performances to an audience they usually practice their routine several times before the final day to show case their performance. What is the importance of the rehearsals

Identify the drawbacks of the following performance measures : While in principle it is feasible for business schools to write explicit pay-for performance contracts with professors, this is rarely done

What tax t should it set to achieve the social optimum : To correct the externality, the government decides to impose a tax of T per unit sold. What tax T should it set to achieve the social optimum?

How the damage to the cutaneous system can affect life : Create a 3-slide Microsoft PowerPoint presentation that includes the following: A description of how the damage to the cutaneous system can affect the quality of life

Develop an action plan for the final presentation : Identify the audience, for example a board of directors or a new management team following an acquisition or a merger, for your final presentation due in Week Five. Provide a rationale for your audience selection.

Calculate deadweight loss associated with the externality : How many more units of this product will the free market produce than is socially optimal? - Calculate the deadweight loss associated with the externality.

How technology might also affect this process : Which organizational model best describes your organization or an organization with which you are familiar? How does your organization currently share knowledge or involve employees in formulating solutions to problems?

User Account

All Pages