Related to Solved Probiem 83) The fumes from dry cleaners can contribute to air
ID: 1163546 • Letter: R
Question
Related to Solved Probiem 83) The fumes from dry cleaners can contribute to air polution Suppose the following dagram Bustretes the sihuation in the dry cleaning market Explain how government ?? use a tax on dry deaning to bring about he oficient level of protein O A. The govenment can use a tax to deorease the marginal sooial cost of producing dry dleaning to equal the °?. The government can use a bax toincrease be marginal pmrate cost of prodangdry dearing to equal the O c. The govenment can use a tax to decrease the marginal private cost of producing dry cleaning to equal the O D. The govermment can use a tax to increase the marginal private benefit of consuming dry cleaning to eql the O E. The govermment can use a tax to decrease the marginal private beneft of comuming dry dleaning to equal the marginal privale cost marginal social cost marginal social cost marginal social benefi marginal social benefe What should the value of the tax be? The tax should be $ per unt Ender your response reounded to tw decimal Quandty (eems cleaned per week in 1000s) How large is the deadweight loss in dolars) from excessive dry cleaning, according to the fgure? The deadwelight lss s housand. (Enter your response as an integer ) ick to select your answerts) MacBook Air 5 6 7Explanation / Answer
b) The government can use a tax to increase the marginal private cost of dry cleaning to equal to marginal social cost
[in the case of negative externalities, MPC is less than MSC].
The value of tax should be equal to $3 per unit.
Deadweight loss = 1/2(11-5)(700-400) = $900 thousand.