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April 21, 2014

Homework Help: ECON

Posted by Sushmitha on Monday, November 14, 2011 at 3:34pm.

demand for sulfur dioxide by coal-fired electricity electricity producers is: P= 1,000 - 16Q where Q is quantity of sulfur dioxide measured in thousands of tons, and P is price per ton of sulfur dioxide.

a)With no policies or restrictions on sulfur emisssions, how much sulfur will be emitted by coal-fired utilities (hint: what is the price of sulfur emissions to electricity producers with no regulations?

b)Economists have determined that the socially optimal quantity of sulfur emissions is 50,000 tons. If the govt wanted to tax sulfur emissions, what would be the amount of the tax that would result in the socialy optimal level of emissions?

Please help. I am totally lost. I know the price of 50,000 would be $200 according to the demand equation, but don't I need a supply curve or another curve to determine the tax by subtracting the difference between the two curves? Please help. How do I do this?

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