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Mathematics, 21.10.2021 14:00 debbys1802
1.The private marginal benefit for commodity X is given by 10-X, where X is the number of units consumed. The private marginal cost of producing X is constant at $5. For each unit of X produced, an external cost of $2 is imposed on members of society.
(1)In the absence of any government intervention, how much X is produced?
(2)What is the efficient level of production of X?
(3)What is the gain to society involved in moving from the inefficient to the efficient level of production?
(4)Suggest a pigouvian tax that would lead to the efficient level. How much revenue would the tax raise?
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