Question: In Figure 17.3, the government may optimally regulate the paper market by taxing output. Given that the output tax remains constant, what are the welfare

In Figure 17.3, the government may optimally regulate the paper market by taxing output. Given that the output tax remains constant, what are the welfare implications of a technological change that drives down the private marginal cost of production?
Figure 17.3: Taxes to Control Pollution

450 MCS = MCP + t(Q) МCР + т MCP Pg = 282 T = 84 MCP = 198 мO MC9 = 84 Demand Og= 84 225 Q, Tons of paper per day Pr

450 MCS = MCP + t(Q) C + MCP Pg = 282 T = 84 MCP = 198 O MC9 = 84 Demand Og= 84 225 Q, Tons of paper per day Price of paper, p, $ per ton

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